Mr. Cody Slater reports

BLACKLINE SAFETY REPORTS RECORD FISCAL FIRST QUARTER 2025 REVENUE OF $37.7 MILLION, UP 43%, AND EBITDA OF $2.1 MILLION

Blackline Safety Corp. has released its fiscal first quarter financial results for the period ended Jan. 31, 2025.

Management commentary

"Blackline reported another record-breaking quarter, achieving $37.7-million in first quarter revenue, representing a 43-per-cent year-over-year increase. This marks our 32nd consecutive quarter of year-over-year revenue growth, reflecting the robust market adoption of our industry-transforming connected safety solutions," said Cody Slater, chief executive officer and chair, Blackline Safety.

The company has further strengthened its financial position by building on the positive EBITDA (earnings before interest, taxes, depreciation and amortization) (1) achieved in Q3 (third quarter) and Q4 (fourth quarter) of 2024, reporting $2.1-million in EBITDA for the first quarter of 2025. Customer demand for Blackline's solutions is strong around the world, reinforcing the ability to scale profitably and execute on the long-term strategic vision.

"Annual recurring revenue reached a record $70.9-million, reflecting a 31-per-cent year-over-year increase and highlighting the strength of our hardware-enabled SaaS business model," Mr. Slater continued. "Additionally, net dollar retention was 128 per cent in the first quarter, marking the seventh consecutive quarter above 125 per cent, demonstrating the continued expansion of our customer base and the value placed on our software solutions."

In Q1 (first quarter), product gross margin was 40 per cent and service gross margin was 77 per cent, contributing to a record gross profit of $22.4-million, a 54-per-cent year-over-year increase. "Our commitment to operational excellence, cost-efficiency and strategic pricing has led to 11 consecutive quarters of improving gross margins on a trailing-12-month basis," said Mr. Slater.

Blackline experienced growth across all geographies, with its largest region, the United States, growing 49 per cent year over year to $19.3-million. European sales increased by 40 per cent to $9.1-million, Canada increased by 27 per cent to $6.8-million and the rest-of-the-world (ROW) region had the highest growth rate of 67 per cent, as sales increased to $2.4-million.

During the first quarter, Blackline announced a strategic private placement financing with an affiliate of the Lowy Family Group, as well as DAK Capital, for $27-million. The Lowy Family's investment business has a long history of investing in world-class public and private software companies, including those that provide integrated hardware and software. Many of these companies have grown significantly since the Lowy Family's investment. Beyond its investment expertise, the Lowy Family brings decades of operating and capital markets experience, having managed the Westfield Group, one of the world's largest property companies, and raising tens of billions of dollars of debt and equity over the past 65 years. The strategic financing positions Blackline for continued, scalable growth in the coming years and further strengthens its balance sheet.

"Blackline Safety achieved the rule-of-40 metric in Q1, the gold standard for SaaS companies, with revenue growth plus adjusted EBITDA margin reaching 47. We see this as a strong milestone for the company and a true validation of our business model," concluded Mr. Slater.

In the first quarter, the company began volume production and global shipping of its EXO 8 area monitor, a key addition to its connected safety product suite. EXO 8 is ideally suited to large industrial organizations in the oil and gas, petrochemical, mining, fire-hazmat, and water and waste water sectors. The potential market demand has been validated by initial orders, including Total Safety's purchase of over 100 units, as well as a large petrochemical customer's order of several dozen units.

Blackline Safety strengthened its position in the United Kingdom water and waste water sector by securing a new customer in the quarter. As a result, eight of the 12 U.K. water utility companies now utilize Blackline's solutions.

(1) This news release presents certain non-GAAP (generally accepted accounting principles) and supplementary financial measures, including key performance indicators used by management and typically used by companies in the software-as-a-service (SaaS) industry, as well as non-GAAP ratios to assist readers in understanding the company's performance.

Fiscal first quarter 2025 and recent financial and operational highlights

Blackline reported a record-breaking first quarter for 2025, with total revenue reaching $37.7-million, a 43-per-cent year-over-year increase. This growth was driven by a significant rise in product sales and recurring service revenues, bolstered by upselling and expanded service adoption. Annual recurring revenue (ARR) rose to $70.9-million, reflecting a 31-per-cent increase, while net dollar retention (NDR) stood at 128 per cent, marking the seventh consecutive quarter above 125 per cent.

Product revenue surged 56 per cent year over year, reaching $17.8-million, primarily due to increasing market demand, targeted demand-generation activities and optimized pricing strategies. Service revenue was up 33 per cent year over year to $19.9-million. Within the service segment, software services revenue grew 31 per cent to $18.2-million, reflecting increased activations and continued customer adoption of Blackline's monitoring, software and data services. The rental segment experienced growth of 74 per cent, with revenue reaching $1.7-million, driven by increased market share captured by the rental business.

The cost of sales for the first quarter increased to $15.3-million, primarily due to higher sales. Blackline improved its gross margin to 60 per cent, up from 55 per cent in the prior-year quarter, driven by efficiency gains, production automation and strategic cost management. Product gross margin increased to 40 per cent in the first quarter from 29 per cent in the prior-year quarter, while service gross margin improved to 77 per cent from 76 per cent in the prior-year comparative quarter, reflecting Blackline's strategic pricing and cost absorption benefits.

Total expenses as a percentage of revenue improved to 60 per cent in the first quarter from 76 per cent in the prior-year quarter as revenue grew by 43 per cent, while total expenses grew by only 13 per cent. General and administrative expenses, as well as sales and marketing expenses, grew by 16 per cent and 26 per cent, respectively, while product research and development costs grew by only 4 per cent.

Blackline achieved positive EBITDA, reporting $2.1-million, a substantial improvement from a $3.4-million EBITDA loss in the prior-year quarter. Net loss narrowed to $1.1-million, an 80-per-cent improvement from the previous-year quarter, primarily due to higher gross profit and a larger foreign exchange gain. Adjusted EBITDA was $1.5-million after eliminating the foreign exchange gains, stock-based compensation and a non-recurring transaction.

Cash and short-term investments totalled $64.4-million at the end of the quarter, up $21.3-million from Q4 2024. The company had available capacity on its senior secured operating facility, including its accordion feature, of $17.3-million as of Jan. 31, 2025, for total available liquidity of $81.7-million, excluding its securitization facility. Due to the strong liquidity position, management notified the securitization facility lender that it will not renew this facility, which is set to expire on March 31, 2025.

Blackline's interim condensed consolidated financial statements, and the management's discussion and analysis on financial condition and results of operations, for the three-month period ended Jan. 31, 2025, are available on SEDAR+ under the company's profile.

Outlook

The uncertainty surrounding tariffs may slow the global investment environment and impose additional costs on the business, with potential negative impacts on revenue and earnings, which the company sees as generally short term in nature. As an international company, Blackline holds inventory around the world in its global offices, including in its Houston location, to rapidly fulfill customer orders. Considering the uncertain economic environment, the company has increased inventory located at its U.S. operations and is making plans to implement some product assembly in the United States. The combination of these two initiatives will serve to mitigate the potential impact of U.S. tariffs on product gross margins and earnings.

On a longer-term view, the company remains well positioned to continue to grow its market share around the world. Blackline remains dedicated to continually innovating its products and services to provide leading-edge technology to a growing list of global customers as it progresses on its journey to becoming the dominant player in the multibillion-dollar gas detection and connected safety industry.

Conference call

A conference call and live webcast have been scheduled for 11 a.m. ET on Wednesday, March 12, 2025. Participants should dial 1-833-821-3052 or 1-647-846-2509 at least 10 minutes prior to the conference time. A live webcast will also be available.

Participants should join the webcast at least 10 minutes prior to the start time to register and install any necessary software. A replay will be available after 2 p.m. ET on March 12, 2025, through April 12, 2025, by dialling 1-855-669-9658 (Canada/U.S. toll-free) or 1-412-317-0088 (international toll), and entering access code 1334098.

About Blackline Safety Corp.

Blackline Safety is a technology leader driving innovation in the industrial work force through IoT (Internet of things). With connected safety devices and predictive analytics, Blackline enables companies to drive toward zero safety incidents and improved operational performance. Blackline provides wearable devices, personal and area gas monitoring, cloud-connected software, and data analytics to meet demanding safety challenges and enhance overall productivity for organizations with customers in more than 75 countries. Armed with cellular and satellite connectivity, Blackline provides a lifeline to tens of thousands of people, having reported over 275 billion data points and initiated over eight million emergency alerts.

Non-GAAP and supplementary financial measures

This news release presents certain non-GAAP and supplementary financial measures, including key performance indicators used by management typically used by the company's competitors in the software-as-a-service industry, as well as non-GAAP ratios to assist readers in understanding the company's performance. These measures do not have any standardized meaning, and therefore are unlikely to be comparable with similar measures presented by other issuers, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

We seek Safe Harbor.