You should read the following discussion and analysis of our financial condition and results of operations together with the financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 26, 2026 (“Annual Report on Form 10-K”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those discussed in the section entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Overview BlackLine’s Agentic Financial Operations Platform drives digital finance transformation by empowering organizations with accurate, efficient, and intelligent financial operations. Powered by Studio360 and using intelligence powered by Verity - a comprehensive suite of embedded, auditable AI capabilities - BlackLine unifies data, streamlines processes, and delivers real-time insights. Our platform is built on an architecture that separates the system processing transactions from the system that independently validates and controls them. The platform is comprised of four primary functional layers that work as one: •The Unified Financial Data Foundation: Aggregates and harmonizes transactional data from disparate enterprise resource planning (“ERP”) and banking systems into a consolidated, extensible data model. •The Auditable Trust and Governance Layer: Enforces configurable rules, permissions, and financial controls to ensure system and user actions remain traceable and compliant. •The Event-Driven Orchestration Engine: Sequences and automates workflows in real time across systems, personnel, and artificial intelligence agents. •The Embedded Intelligence Layer (Verity AI): Integrates machine learning, generative artificial intelligence, and agentic reasoning directly into financial workflows to assist with risk detection, proposing solutions, and automating decision-making under the direction and oversight of finance and accounting teams. We are a holding company and conduct our operations through our wholly-owned subsidiary, BlackLine Systems, Inc. At June 30, 2026, we had 4,260 customers, exclusive of on-premise software. Additionally, we continue to build strategic relationships with technology vendors, providers of learning language models, professional services firms, business process outsourcers, and resellers. Our cloud-based solutions, delivered by our BlackLine Studio360 Platform, include Account Reconciliations, Transaction Matching, Task Management, Reporting & Analysis, Journal Entry, Journals Risk Analyser, Account Analysis, Consolidation, Compliance, Smart Close for SAP, Verity Accruals, Cash Application, Credit & Risk Management, Collections Management, Disputes & Deductions Management, Team & Task Management, AR Intelligence, Electronic Invoicing & Payments, Intercompany Create, Intercompany Balance & Resolve, and Intercompany Net & Settle. We derived approximately 95% of our revenue from subscriptions to our cloud-based software platform and approximately 5% from professional services for the six months ended June 30, 2026. Our subscription contracts have initial non-cancellable terms of one year to three years with renewal options. The majority of new contracts in 2025 and during the six months ended June 30, 2026 carried an initial non-cancellable term of three years. In 2025, we updated our pricing model to reflect the value of our solutions based on factors such as product mix, organization size, and volumetrics (e.g., number of transactions or entities). We typically invoice subscription fees annually in advance, which are initially recorded as deferred revenue and recognized ratably over the contract term. First-year subscription fees are generally payable within 30 days of contract execution, with subsequent fees due upon renewal. Professional services consist primarily of implementation and consulting services. Our products are available for immediate use upon granting customer access. We typically assist customers with implementation and provide consulting services to help them optimize the use of our solutions. We invoice customers for our consulting services on a time-and-materials basis and recognize that revenue as services are performed. A limited number of our 23 customers are provided professional services for a fixed fee, for which we invoice in advance. The fee is initially recorded as deferred revenue and recognized on a proportional-performance basis as the services are rendered. We sell our solutions primarily through our direct sales force, which leverages our relationships with technology vendors, professional services firms, and business process outsourcers. Our solutions integrate with SAP’s ERP systems, and SAP resells our product as SAP SolEx, for which we receive a percentage of the related revenues. We also maintain a strategic agreement with Google Cloud through which we jointly engage in selling and go-to-market activities to bring enhanced automation capabilities to customers. Our ability to maximize the lifetime value of our customer relationships depends, in part, on the willingness of customers to purchase additional licenses and products from us. Our sales and customer success teams focus on maintaining high satisfaction and educating customers on the value and use of our full product portfolio to support account expansion. The length of our sales cycle depends on the size of a potential customer and contract, as well as the type of solution or product being purchased. Sales cycles for global enterprise customers are generally longer than those for mid-size customers, and cycle duration increases for larger or more strategic products, such as our Intercompany solutions. As we focus on increasing average contract size and expanding adoption of strategic products, we have seen and expect the sales cycle to lengthen and remain less predictable which may contribute to variability in period-to-period results. We have historically signed a high percentage of agreements with new customers, as well as renewal agreements with existing customers, in the fourth quarter of each year and usually during the last month of the quarter. Because a significant number of contracts have renewal terms of one year, agreements entered into late in the year typically renew during the same period in subsequent years. While this seasonality is reflected in our billings and bookings, the impact on overall revenue is minimal due to our ratable revenue recognition model. For the quarters ended June 30, 2026 and 2025, we had revenues totaling $187.8 million and $172.0 million, respectively. We generated net income attributable to BlackLine, Inc. of $16.5 million and $8.3 million for the quarters ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026 and 2025, we had revenues totaling $371.0 million and $339.0 million, respectively. We generated net income attributable to BlackLine, Inc. of $24.6 million and $14.3 million for the six months ended June 30, 2026 and 2025, respectively. Global Macroeconomic Factors Our operating results may vary due to the impact of industry or global economic conditions on us or our customers. General macroeconomic conditions, such as political conflicts, recession, inflation or rising interest rates, an economic downturn in the U.S. or internationally, adverse business conditions and liquidity concerns, have and could continue to adversely affect demand for our products and make it difficult to accurately forecast and plan our future business activities. As a result of economic uncertainty, and protracted vendor selection processes associated with our customers’ analysis of our, and others’ AI offerings, we may see customers delay and defer purchasing decisions, which could adversely impact our near-term demand. Key Metrics We regularly review a number of metrics, including the following key metrics, to evaluate our business and performance, identify trends affecting our business, formulate financial projections, and make strategic decisions. Jun. 30, 2025 Sep. 30, 2025 Dec. 31, 2025 Mar. 31, 2026 Jun. 30, 2026 Dollar-based net revenue retention rate 105 % 103 % 105 % 105 % 102 % Platform pricing ARR as a percentage of eligible ARR N/A N/A 11 % 13 % 17 % Number of customers 4,451 4,424 4,394 4,301 4,260 Dollar-based net revenue retention rate. We believe that dollar-based net revenue retention rate is an important metric to measure the long-term value of customer agreements and our ability to retain and grow our relationships with existing customers over time. We calculate dollar-based net revenue retention rate as the implied monthly subscription and support revenue at the end of a period for the base set of customers from which we generated subscription revenue in the year prior to the calculation, divided by the implied monthly subscription and support revenue one year prior to the date of calculation for that same customer base. This calculation does not reflect implied monthly subscription and support revenue for new customers added during the one-year period but 24 does include the effect of customers who terminated during the period. We define implied monthly subscription and support revenue as the total amount of minimum subscription and support revenue contractually committed to, under each of our customer agreements over the entire term of the agreement, divided by the number of months in the term of the agreement. At June 30, 2026, our dollar-based net revenue retention rate declined from the quarter ended March 31, 2026, primarily due to the impact of unfavorable foreign exchange rates. Our ability to maximize the lifetime value of our customer relationships will depend, in part, on the willingness of the customer to purchase additional products from us. We rely on our customer success and sales teams to support and grow our existing customers by maintaining high customer satisfaction and educating the customer on the value our products provide. Platform pricing ARR as a percentage of eligible ARR. Platform pricing ARR as a percentage of eligible ARR is calculated as platform annual recurring revenue divided by our eligible annual recurring revenue. We define eligible ARR as total annual recurring revenue, excluding revenue from SAP SolEx and the public sector. Management believes that this metric is useful for tracking the progress of the new pricing strategy launched in 2025. Number of customers. We believe that our ability to expand our customer base is an indicator of our market penetration and the growth of our business. We define a customer as a company that contributes to our subscription and support revenue as of the measurement date. In situations where an organization has multiple subsidiaries or divisions, each entity that is invoiced as a separate entity is treated as a separate customer. However, where an existing customer requests its invoice be divided for the sole purpose of restructuring its internal billing arrangement without any incremental increase in revenue, such customer continues to be treated as a single customer. For the quarters and six months ended June 30, 2026 and 2025, no single customer accounted for more than 10% of our total revenues. The total number of customers at June 30, 2026 declined marginally compared to June 30, 2025, primarily due to our strategic prioritization of enterprise and mega‑enterprise customers. Importantly, this shift reflects our focus on higher‑quality revenue and long‑term growth. Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe the non-GAAP measures below are useful to us and our investors in evaluating our business. These non-GAAP financial measures are useful because they provide consistency and comparability with our past performance, facilitate period-to-period comparisons of operations and facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. Quarter Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands, except percentages) GAAP gross profit $ 142,678 $ 129,403 $ 281,828 $ 255,410 GAAP gross margin 76.0 % 75.2 % 76.0 % 75.4 % GAAP operating income $ 10,990 $ 7,545 $ 17,225 $ 11,120 GAAP operating margin 5.9 % 4.4 % 4.6 % 3.3 % GAAP net income attributable to BlackLine, Inc. $ 16,481 $ 8,292 $ 24,607 $ 14,347 Diluted net income per share attributable to BlackLine, Inc. $ 0.27 $ 0.13 $ 0.40 $ 0.23 25 Quarter Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands, except percentages) Non-GAAP gross profit $ 150,944 $ 137,145 $ 297,897 $ 269,979 Non-GAAP gross margin 80.4 % 79.7 % 80.3 % 79.7 % Non-GAAP operating income $ 43,812 $ 38,007 $ 83,416 $ 72,960 Non-GAAP operating margin 23.3 % 22.1 % 22.5 % 21.5 % Non-GAAP net income attributable to BlackLine, Inc. $ 42,909 $ 37,902 $ 82,515 $ 74,226 Diluted non-GAAP net income per share attributable to BlackLine, Inc. $ 0.61 $ 0.51 $ 1.17 $ 1.00 Non-GAAP Gross Profit and Non-GAAP Gross Margin. Non-GAAP gross profit is defined as GAAP revenues less GAAP cost of revenue adjusted for amortization of acquired developed technology, stock-based compensation, and transaction-related costs (including, but not limited to, accounting, legal, and advisory fees related to the transaction, as well as transaction-related retention bonuses). Non-GAAP gross margin is defined as non-GAAP gross profit divided by GAAP revenues. We believe that presenting non-GAAP gross profit and non-GAAP gross margin is useful to investors as it eliminates the impact of certain non-cash expenses and allows a direct comparison of gross profit between periods. Non-GAAP Income from Operations and Non-GAAP Operating Margin. Non-GAAP income from operations is defined as GAAP income from operations adjusted for amortization of intangible assets, stock-based compensation, change in fair value of contingent consideration, transaction-related costs, restructuring costs, and legal settlement gains or costs. Non-GAAP operating margin is defined as non-GAAP income from operations divided by GAAP revenues. We believe that presenting non-GAAP income from operations and non-GAAP operating margin is useful to investors as it eliminates the impact of items that have been impacted by our acquisitions and other related costs in order to allow a direct comparison of income from operations between all periods presented. Non-GAAP Net Income Attributable to BlackLine and Diluted Non-GAAP Net Income Per Share Attributable to BlackLine, Inc. Non-GAAP net income attributable to BlackLine is defined as GAAP net income attributable to BlackLine adjusted for the income tax effects of acquisitions, stock-based compensation shortfalls and windfalls, and the discrete tax impact of other non-GAAP adjustments, amortization of intangible assets, stock-based compensation, amortization of debt issuance costs from our 1.00% Convertible Senior Notes due in 2029 (the “2029 Notes”) and 0.00% Convertible Senior Notes, which matured and were paid off in 2026 (the “2026 Notes” and, together with the 2029 Notes, the “Notes” or “convertible senior notes”), change in fair value of contingent consideration, transaction-related costs, restructuring costs, legal settlement gains or costs, adjustment to the redeemable non-controlling interest to the redemption amount, and gain on extinguishment of convertible senior notes. Diluted non-GAAP net income per share attributable to BlackLine, Inc. includes the adjustment for shares resulting from the elimination of stock-based compensation. We believe that presenting non-GAAP net income attributable to BlackLine is useful to investors as it eliminates the impact of items that have been impacted by our acquisitions and other related costs to allow a direct comparison of net income between all periods presented. 26 Reconciliation of Non-GAAP Financial Measures The following table presents a reconciliation of gross profit, gross margin, operating income, operating margin, and net income, the most comparable GAAP measures, to non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, and non-GAAP net income: Quarter Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands, except percentages) Non-GAAP Gross Profit: Gross profit $ 142,678 $ 129,403 $ 281,828 $ 255,410 Amortization of acquired developed technology 3,541 3,207 7,063 6,380 Stock-based compensation 4,725 4,535 9,006 8,181 Transaction-related costs — — — 8 Total non-GAAP gross profit $ 150,944 $ 137,145 $ 297,897 $ 269,979 Gross margin 76.0 % 75.2 % 76.0 % 75.4 % Non-GAAP gross margin 80.4 % 79.7 % 80.3 % 79.7 % Non-GAAP Operating Income: Operating income $ 10,990 $ 7,545 $ 17,225 $ 11,120 Amortization of intangible assets 3,801 3,468 7,584 7,118 Stock-based compensation 28,566 25,571 53,351 44,990 Transaction-related costs — 128 2,923 3,138 Restructuring and legal settlement costs 455 1,295 2,333 6,594 Total non-GAAP operating income $ 43,812 $ 38,007 $ 83,416 $ 72,960 GAAP operating margin 5.9 % 4.4 % 4.6 % 3.3 % Non-GAAP operating margin 23.3 % 22.1 % 22.5 % 21.5 % Non-GAAP Net Income Attributable to BlackLine, Inc.: Net income attributable to BlackLine, Inc. $ 16,481 $ 8,292 $ 24,607 $ 14,347 Provision for (benefit from) income taxes 1,115 (12) 3,050 (666) Amortization of intangible assets 3,801 3,468 7,584 7,118 Stock-based compensation 28,566 25,447 53,351 44,755 Amortization of debt issuance costs 641 845 1,446 1,679 Transaction-related costs — 128 2,923 3,138 Restructuring and legal settlement costs 455 1,295 2,333 6,594 Adjustment to redeemable non-controlling interest (8,150) (1,561) (12,779) (2,739) Total non-GAAP net income attributable to BlackLine, Inc. $ 42,909 $ 37,902 $ 82,515 $ 74,226 27 Results of Operations The following table sets forth our statements of operations information for each of the periods indicated: Quarter Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands) Revenues Subscription and support $ 177,856 $ 163,027 $ 351,570 $ 321,489 Professional services 9,966 8,998 19,407 17,467 Total revenues 187,822 172,025 370,977 338,956 Cost of revenues Subscription and support 37,509 35,189 73,945 69,319 Professional services 7,635 7,433 15,204 14,227 Total cost of revenues 45,144 42,622 89,149 83,546 Gross profit 142,678 129,403 281,828 255,410 Operating expenses Sales and marketing 68,489 64,712 135,910 127,775 Research and development 31,294 27,964 61,854 53,689 General and administrative 30,788 28,138 64,029 56,483 Restructuring costs 1,117 1,044 2,810 6,343 Total operating expenses 131,688 121,858 264,603 244,290 Income from operations 10,990 7,545 17,225 11,120 Other income (expense) Interest income 4,138 8,555 10,196 17,447 Interest expense (2,360) (2,533) (4,854) (5,055) Other income, net 1,778 6,022 5,342 12,392 Income before income taxes 12,768 13,567 22,567 23,512 Provision for income taxes 3,500 6,176 9,408 10,847 Net income 9,268 7,391 13,159 12,665 Net income attributable to redeemable non-controlling interest 937 660 1,331 1,057 Adjustment attributable to redeemable non-controlling interest (8,150) (1,561) (12,779) (2,739) Net income attributable to BlackLine, Inc. $ 16,481 $ 8,292 $ 24,607 $ 14,347 Comparison of Quarters and Six Months Ended June 30, 2026 and 2025 Revenues Quarter Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % (in thousands, except percentages) Subscription and support $ 177,856 $ 163,027 $ 14,829 9 % $ 351,570 $ 321,489 $ 30,081 9 % Professional services 9,966 8,998 968 11 % 19,407 17,467 1,940 11 % Total revenues $ 187,822 $ 172,025 $ 15,797 9 % $ 370,977 $ 338,956 $ 32,021 9 % June 30, 2026 2025 Dollar-based net revenue retention rate 102 % 105 % Platform pricing ARR as a percentage of eligible ARR 17 % N/A Number of customers 4,260 4,451 28 The increase in revenues for the quarter and six months ended June 30, 2026, compared to the quarter and six months ended June 30, 2025, was primarily driven by revenue from product expansion from existing customers and bookings from new customers. The total number of customers at June 30, 2026 declined marginally compared to June 30, 2025, primarily due to our strategic prioritization of enterprise and mega‑enterprise customers. Importantly, this shift reflects our focus on higher‑quality revenue and long‑term growth. Cost of revenues Quarter Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % (in thousands, except percentages) Subscription and support $ 37,509 $ 35,189 $ 2,320 7 % $ 73,945 $ 69,319 $ 4,626 7 % Professional services 7,635 7,433 202 3 % 15,204 14,227 977 7 % Total cost of revenues $ 45,144 $ 42,622 $ 2,522 6 % $ 89,149 $ 83,546 $ 5,603 7 % Gross margin 76.0 % 75.2 % 76.0 % 75.4 % The increase in total cost of revenues for the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, was primarily due to the following: •$2.9 million increase in computer software expenses due to higher cloud hosting costs and continued strategic investments in our embedded product solutions; and •$0.6 million increase in amortization of developed technology due to net additions to software placed into service; partially offset by •$0.7 million decrease in employee compensation and benefits; and •$0.6 million decrease in professional fees. The increase in total cost of revenues for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily due to the following: •$6.6 million increase in computer software expenses due to higher cloud hosting costs and continued strategic investments in our embedded product solutions; •$1.3 million increase in amortization of developed technology due to net additions to software placed into service; and •$0.4 million increase in depreciation and amortization due to the addition of developed technology from the WiseLayer acquisition, net of certain assets becoming fully amortized in prior periods; partially offset by •$1.7 million decrease in employee compensation and benefits; and •$1.1 million decrease in professional fees. Sales and marketing Quarter Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % (in thousands, except percentages) Sales and marketing $ 68,489 $ 64,712 $ 3,777 6 % $ 135,910 $ 127,775 $ 8,135 6 % Percentage of total revenues 36.5 % 37.6 % 36.6 % 37.7 % The increase in sales and marketing expenses for the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, was primarily due to the following: •$3.3 million increase in employee compensation and benefits; and •$0.7 million increase in travel-related expenses; partially offset by •$0.4 million decrease in professional fees. 29 The increase in sales and marketing expenses for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily due to the following: •$8.1 million increase in employee compensation and benefits; and •$1.7 million increase in travel-related expenses; partially offset by •$1.0 million decrease in professional fees; and •$0.6 million decrease in digital marketing expense due to streamlined marketing efforts. Research and development Quarter Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % (in thousands, except percentages) Research and development, gross $ 38,434 $ 34,625 $ 3,809 11 % $ 76,041 $ 66,380 $ 9,661 15 % Capitalized internally developed software costs (7,140) (6,661) (479) 7 % (14,187) (12,691) (1,496) 12 % Research and development, net $ 31,294 $ 27,964 $ 3,330 12 % $ 61,854 $ 53,689 $ 8,165 15 % Percentage of total revenues 16.7 % 16.3 % 16.7 % 15.8 % The increase in research and development expenses for the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, was primarily due to the following: •$3.0 million increase in employee compensation and benefits; and •$0.9 million increase in computer software expenses due to continued strategic investments in automation; partially offset by •$0.5 million increase in capitalized software costs primarily due to the continued development of new solution offerings. Collectively, these increases resulted in a decrease in net expenses; and •$0.5 million decrease in professional fees. The increase in research and development expenses for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily due to the following: •$8.1 million increase in employee compensation and benefits; •$1.8 million increase in computer software expenses due to higher spend on cloud hosting services and continued strategic investments in automation; and •$0.4 million increase in travel-related expenses; partially offset by •$1.5 million increase in capitalized software costs primarily due to the continued development of new solution offerings. Collectively, these increases resulted in a decrease in net expenses; and •$0.8 million decrease in professional fees. General and administrative Quarter Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % (in thousands, except percentages) General and administrative $ 30,788 $ 28,138 $ 2,650 9 % $ 64,029 $ 56,483 $ 7,546 13 % Percentage of total revenues 16.4 % 16.4 % 17.3 % 16.7 % The increase in general and administrative expenses for the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, was primarily due to the following: •$2.4 million increase primarily due to an unfavorable change in foreign currency, net of the impact of foreign currency forward contracts; partially offset by 30 •$0.5 million decrease in employee compensation and benefits. The increase in general and administrative expenses for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily due to the following: •$4.3 million increase primarily due to an unfavorable change in foreign currency, net of the impact of foreign currency forward contracts; •$1.8 million increase in employee compensation and benefits; •$0.6 million increase in advisory and legal-related expenses; •$0.5 million increase in professional fees; and •$0.4 million increase in travel-related expenses. Restructuring costs Quarter Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % (in thousands, except percentages) Restructuring costs $ 1,117 $ 1,044 $ 73 7 % $ 2,810 $ 6,343 $ (3,533) (56 %) Restructuring costs were relatively flat during the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025. The decrease in restructuring costs during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily due to lower additional one-time termination benefits under the Fiscal 2025 restructuring programs. Refer to “Note 9 - Restructuring Costs” in our unaudited condensed consolidated financial statements for additional information. Interest income Quarter Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % (in thousands, except percentages) Interest income $ 4,138 $ 8,555 $ (4,417) (52 %) $ 10,196 $ 17,447 $ (7,251) (42 %) The decrease in interest income during the quarter and six months ended June 30, 2026, compared to the quarter and six months ended June 30, 2025, was primarily due to decreased average balances on our investments and cash balances, and to a lesser extent, a decrease in average interest rates on our investments and cash balances. Interest expense Quarter Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % (in thousands, except percentages) Interest expense $ 2,360 $ 2,533 $ (173) (7 %) $ 4,854 $ 5,055 $ (201) (4 %) Interest expense for the quarter and six months ended June 30, 2026, compared to the quarter and six months ended June 30, 2025, decreased slightly due to the repayment of our 2026 Notes in March 2026. Refer to “Note 8 - Convertible Senior Notes” in our unaudited condensed consolidated financial statements for additional information. 31 Provision for income taxes Quarter Ended June 30, Change Six Months Ended June 30, Change 2026 2025 $ % 2026 2025 $ % (in thousands, except percentages) Provision for income taxes $ 3,500 $ 6,176 $ (2,676) (43 %) $ 9,408 $ 10,847 $ (1,439) (13 %) We are subject to federal and state income taxes in the U.S. and taxes in foreign jurisdictions. For the quarter ended June 30, 2026, our annual estimated effective tax rate differed from the U.S. federal statutory rate of 21% primarily as a result of non-deductible officer compensation, stock-based compensation shortfalls, foreign taxes, changes in our valuation allowance for income taxes, and a one-time tax benefit associated with the base erosion and anti-abuse tax. For the quarters ended June 30, 2026 and 2025, we recorded $3.5 million and $6.2 million in income tax expense, respectively. For the six months ended June 30, 2026 and 2025, we recorded $9.4 million and $10.8 million in income tax expense, respectively. The decrease in income tax expense for the quarter and six months ended June 30, 2026, compared to the quarter and six months ended June 30, 2025, resulted primarily from a one-time tax benefit associated with the base erosion and anti-abuse tax recognized in the current quarter, along with changes in the mix of profitable jurisdictions. Liquidity and Capital Resources At June 30, 2026, our principal sources of liquidity were an aggregate of $527.8 million of cash and cash equivalents and marketable securities, which primarily consist of short-term, money market mutual funds, U.S. treasury securities, commercial paper, and corporate bonds. We believe our existing cash and cash equivalents, investments in marketable securities, and cash from operations will be sufficient to meet our working capital needs, capital expenditures, financing obligations, and share repurchases for at least the next 12 months. Contractual Obligations and Commitments Convertible senior notes and capped calls At June 30, 2026, we had $675.0 million aggregate principal amount of 2029 Notes outstanding. We plan to, and believe we are able to, make all expected interest payments on the 2029 Notes in the next 12 months. In connection with the offering of the 2029 Notes, we entered into privately-negotiated capped call transactions (the “2029 Capped Calls”) with certain counterparties covering, subject to anti-dilution adjustments, approximately 9.9 million shares of our common stock, and are generally expected to offset the potential economic dilution of our common stock upon any conversions of the 2029 Notes up to the initial cap price. The 2029 Capped Calls have an initial strike price of $68.47 per share subject to certain adjustments, which corresponds to the initial conversion price of the 2029 Notes and an initial cap price of $92.17 per share, subject to certain adjustments. At June 30, 2026, all of the 2029 Capped Calls remained outstanding. Lease Liabilities At June 30, 2026, we have obligations totaling $23.4 million related to existing property and equipment leases. As of June 30, 2026, we committed $25.0 million for a lease signed but not yet commenced. This lease, which is expected to commence within the next twelve months, has a lease term of 15.5 years. Purchase Obligations Purchase obligations represent our most significant contractual obligations in the ordinary course of business for which we have not received the related goods or services, in whole or in part. At June 30, 2026, we had $147 million of contractual obligations, with approximately $52 million payable within 12 months, and have additional contractual obligations with other vendors that are individually immaterial and which we can readily settle given our liquidity position and capital resources. 32 Unrecognized Tax Liabilities At June 30, 2026, while we have liabilities for unrecognized tax benefits of $22.7 million, due to their nature, there is a high degree of uncertainty regarding the timing of future cash outflows and other events that extinguish these liabilities. Letters of Credit Commitments under letters of credit at June 30, 2026 were scheduled to expire as follows (in thousands): Total Less than 1 Year 1-3 Years 3-5 Years Thereafter Letters of credit $ 1,009 $ 171 $ 838 $ — $ — Letters of credit are maintained pursuant to certain of our lease arrangements. The letters of credit remain in effect at varying levels through the terms of the related agreements. Repurchase Program Under our stock repurchase program, which authorizes the periodic purchase of our common stock, the Board of Directors (the "Board") approved two increases to the stock repurchase program: an additional $100 million of common stock on March 13, 2026, and an additional $100 million of common stock on July 31, 2026. These authorizations increased the total authorized amount under the program from $400 million to $500 million, and subsequently to $600 million. Repurchases may be made from time to time through open market repurchases or through privately-negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares under this authorization. The repurchase program does not obligate us to acquire any particular amount of our common stock, and it may be suspended at any time in our discretion. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. We repurchased and retired approximately 1.2 million shares of common stock for $37.7 million during the quarter ended June 30, 2026, and 2.4 million shares for $84.8 million during the six months ended June 30, 2026. At June 30, 2026, $179.7 million remained available for repurchases under this program. Future Capital Requirements Our future capital requirements will depend on many factors, including our growth rate, strategic relationships and international operations, the timing and extent of spending to support research and development efforts, future merger and acquisition activities, repurchase or refinancing of our existing indebtedness, repurchases of our common stock, and the continuing market acceptance of our solutions. From time to time, we have required, and may in the future require or opportunistically raise, additional equity or debt financing. Sales of additional equity or equity-linked securities could result in dilution to our stockholders. If we raise funds by borrowing from third parties, the terms of those financing arrangements would require us to incur interest expense and may include negative covenants or other restrictions on our business that could impair our operating flexibility. We can provide no assurance that financing will be available at all or, if available, that we would be able to obtain financing on terms favorable to us. If we are unable to raise additional capital when needed, we would be required to curtail our operating activities and capital expenditures, and our business operating results and financial condition would be adversely affected. Cash Flows The following table sets forth a summary of our cash flows for the periods indicated: Six Months Ended June 30, 2026 2025 (in thousands) Net cash provided by operating activities $ 91,287 $ 79,087 Net cash provided by (used in) investing activities $ 88,211 $ (414,018) Net cash used in financing activities $ (326,363) $ (92,224) 33 Net Cash Provided By Operating Activities Our cash flows provided by operating activities are primarily driven by net income, and cash generated from collections in accordance with our subscription-based revenue model wherein billings occur in advance of revenue recognition, adjusted for significant non-cash activity. Non-cash activity primarily includes depreciation and amortization, stock-based compensation, non-cash lease expense, amortization of debt issuance costs, accretion of premiums on marketable securities, and deferred taxes. For the six months ended June 30, 2026, cash provided by operating activities was $91.3 million, resulting from net non-cash expenses of approximately $78.6 million and net income of $13.2 million, partially offset by net cash flows used as a result of changes in operating assets and liabilities of $0.5 million. The $0.5 million of net cash flows used as a result of changes in our operating assets and liabilities reflected primarily the following: •$16.8 million decrease in accrued expenses and other current liabilities primarily due to payments for annual bonuses, commissions, our Fiscal 2025 restructuring programs, and taxes, partially offset by the timing of invoices for professional and third-party services; •$7.0 million decrease in accounts payable due to timing of payments; •$4.3 million decrease in deferred revenue primarily due to seasonality in the sales cycle, which led to lower billings and higher revenue recognition; and •$3.6 million decrease in operating lease liabilities. These decreases in the changes to our operating assets and liabilities were partially offset by the following: •$26.8 million decrease in accounts receivable primarily due to increased collections and lower billings; and •$4.7 million decrease in other assets primarily due to a net decrease in prepaid commissions. For the six months ended June 30, 2025, cash provided by operating activities was $79.1 million, resulting from net non-cash expenses of approximately $63.6 million, net income of $12.7 million, and net cash flows provided as a result of changes in operating assets and liabilities of $2.8 million. The $2.8 million of net cash flows provided as a result of changes in our operating assets and liabilities reflected primarily the following: •$5.5 million decrease in accounts receivable primarily due to increased collections; •$5.4 million increase in other long-term liabilities; •$4.8 million net decrease in prepaid expenses and other current assets primarily due to amortization of prepaid balances and timing of tax payments, partially offset by prepaid insurance and cloud-based data storage costs to support our suite of solutions; •$2.5 million increase in accounts payable due to timing of payments; and •$2.2 million increase in deferred revenue primarily due to customer growth and timing of billings for subscription and support. These changes in our operating assets and liabilities were partially offset by the following: •$13.0 million decrease in accrued expenses and other current liabilities primarily due to annual bonus payments; •$3.2 million decrease in operating lease liabilities; and •$1.4 million increase in other assets due to a net increase in prepaid commissions and cloud computing costs. Net Cash Provided By (Used In) Investing Activities Our investing activities consist primarily of investments in, and maturities and sales of marketable securities, capitalized software development costs, and capital expenditures for property and equipment. For the six months ended June 30, 2026, cash provided by investing activities was $88.2 million primarily as a result of the following: •$107.3 million of proceeds from maturities and sales of marketable securities, net of purchases; partially offset by 34 •$15.0 million for capitalized software development costs; and •$4.0 million in purchases of property and equipment. For the six months ended June 30, 2025, cash used in investing activities was $414.0 million primarily as a result of the following: •$392.9 million of purchases of marketable securities, net of proceeds from maturities; •$14.2 million for capitalized software development costs; and •$6.9 million in purchases of property and equipment. Net Cash Used In Financing Activities For the six months ended June 30, 2026, cash used in financing activities was $326.4 million primarily as a result of the following: •$230.2 million for the repayment of the 2026 Notes with cash on hand; •$84.5 million for repurchases of common stock; •$13.1 million for acquisitions of common stock for tax withholding obligations; and •$3.3 million for the purchase of additional shares of common stock in BlackLine K.K., resulting in a decrease in the redeemable non-controlling interest; partially offset by •$4.1 million of proceeds from the employee stock purchase plan. For the six months ended June 30, 2025, cash used in financing activities was $92.2 million primarily as a result of the following: •$88.8 million of repurchases of common stock; and •$13.0 million for acquisitions of common stock for tax withholding obligations; partially offset by •$5.0 million of proceeds from exercises of stock options; and •$4.6 million of proceeds from the employee stock purchase plan. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP, which requires us to make estimates and assumptions about future events that affect the amounts reported in our unaudited condensed consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. During the quarter ended June 30, 2026, there were no significant changes to our critical estimates as detailed in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025. Recent Accounting Pronouncements See Note 2 - “Basis of Presentation, Significant Accounting Policies, and Recently-Issued Accounting Pronouncements” contained in the “Notes to Unaudited Condensed Consolidated Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10-Q for a full description of the recent accounting pronouncements, and our expectation of their impact, if any, on our results of operations and financial condition.