Goldman Sachs reiterated its Sell recommendation on BlackLine (NASDAQ:BL) and left its price target at $44.00, flagging concerns that the firm’s recent growth gains may not be durable. BlackLine shares are currently quoted at $42.19 and have fallen 30.08% over the last 12 months, trading close to a 52-week low of $40.82, according to InvestingPro data.
The financial software provider’s latest quarter produced results that were mixed: overall revenue met consensus expectations and operating profit (EBIT) came in slightly ahead of forecasts, while subscription revenue missed by roughly 50 basis points. That subscription shortfall was cushioned by stronger-than-expected revenue from professional services.
Public filings and InvestingPro data show BlackLine remains profitable on a trailing basis, with $686.71 million in revenue and a gross profit margin of 75.34%.
On forward-looking metrics, the company disclosed an acceleration in annual recurring revenue (ARR) growth to 9.5% year-over-year, or about 8% when excluding foreign exchange effects, up from 7.4% in Q3. Trailing twelve-month billings growth also improved to roughly 8.5%, compared with approximately 7% through the first three quarters of the year. Despite these improvements, InvestingPro reports that 12 analysts have lowered their earnings estimates for the upcoming period, and consensus revenue growth for fiscal 2025 is projected at 7%.
Goldman Sachs warned investors that the reported improvements were achieved versus what the bank characterized as "significantly easier comps" compared with Q3, suggesting part of the reported acceleration may reflect simpler year-over-year comparisons. The firm emphasized that investors will likely want to see sustained higher growth rates as year-over-year comparisons become more difficult starting in the first quarter.
While Goldman Sachs acknowledged BlackLine’s strategic priorities as reasonable for long-term expansion, the bank remains cautious until there is clearer evidence that the company’s growth programs - including efforts to monetize AI - can reliably offset a weak software demand backdrop and rising competitive pressures.
InvestingPro assigns BlackLine an overall financial health score of "GOOD" and reports a price-to-earnings ratio of 37.71. InvestingPro’s analysis also notes the stock may appear undervalued versus its calculated Fair Value; interested investors can consult the platform’s Pro Research Report, which covers over 1,400 U.S. equities.
In separate company disclosures, BlackLine reported fourth-quarter 2025 results that beat expectations: earnings per share were $0.63 versus a consensus $0.59 estimate, representing a 6.78% surprise. Quarterly revenue totaled $183.18 million, narrowly above the predicted $182.98 million.
Market analysts have shown differing stances. Morgan Stanley trimmed its price target for BlackLine to $68.00 from $73.00 but kept an Overweight rating, citing constructive growth indicators including a 13% increase in contract revenue performance obligations and a 10% rise in ARR. Citizens reiterated a Market Outperform rating and set a $70.00 target, pointing to the company’s positioning to evolve from the SaaS era into the AI software era.
Taken together, the mixed quarter, improving recurring metrics, downward estimate revisions from a dozen analysts, and divergent price targets from major brokerages create a nuanced picture for BlackLine. Investors and market participants will be watching upcoming quarters closely to determine whether the recent uptick in ARR and billings growth can be sustained as comparable periods grow harder to beat.