Blackline Inc: 2Q26 Results - AI Adoption in Finance Takes Time

Research evidence excerpt

M

Update

August 5, 2026 01:39 AM GMT

Morgan Stanley & Co. LLC

Blackline Inc | North America

Chris Quintero

Equity Analyst

2Q26 Results - AI Adoption in

Finance Takes Time

Adam Wood

Equity Analyst

Blackline Inc (BL.O, BL US)

What’s Changed

Software | United States of America

Blackline Inc (BL.O)

From

To

Price Target

$33.00

$30.00

AlphaSignals Earnings Reaction

Unchanged

Modest shortfall

Largely unchanged

Impact to our thesis

Financial results versus consensus

Direction of next 12-month

consensus EPS

Source: Company data, Morgan Stanley Research

ARR growth slowed to 7% cc as AI enterprise governance

hurdles stretched deal cycles and platform pricing creates a NT

headwind. Product market fit signals for Verity are encouraging,

but scaled adoption looks gradual. We stay EW, seeing 2027 as

the more likely inflection for AI-driven growth.

BlackLine delivered a disappointing Q2 as ARR YoY growth of 6% (7% constant

currency) missed consensus' 9% estimate. NRR declined to 102% (104% constant

Stock Rating

Industry View

Price target

Shr price, close (Aug 4, 2026)

Mkt cap, curr (mm)

52-Week Range

Fiscal Year Ending

Equal-weight

Attractive

$30.00

$33.12

$2,435

$59.57-24.70

12/25 12/26e 12/27e 12/28e

EPS ($)**

Revenue, net ($mm)

FCFfY ($mm)

2.07

700

39

2.42

765

65

2.74

825

91

3.15

893

131

Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

framework

** = Based on consensus methodology

e = Morgan Stanley Research estimates

Quarterly Revenue, net ($mm)

Quarter

2025

Q1

Q2

Q3

Q4

167

172

178

183

2026e 2026e

Prior Current

194

202

183a

188a

193

201

2027e 2027e

Prior Current

201

206

217

226

198

202

208

217

e = Morgan Stanley Research estimates, a = Actual Company reported data

currency) from Q1's 105% (106% constant currency). Management attributed the

slowdown primarily to elongated deal cycles, especially at the mega-enterprise

level, as AI deals involving something as critical as financial software are requiring

additional risk/compliance/governance sign offs and testing before signing. The

typical 9-12 month sale cycle is now being elongated by another 1-2 months.

Management framed this as a temporary dynamic as they expect enterprises to

…