BlackLine (BL -1.94%) provides enterprise clients with cloud-based, software-as-a-service (SaaS) solutions to what are traditionally labor-intensive accounting tasks. When the company reported its first-quarter earnings, there were, once again, several indications that BlackLine's products and services are in high demand.

In Q1, revenue rose to $64.1 million, a 25% increase year over year, and adjusted earnings per share (EPS) grew to $0.02, up from $0.01 in 2018's first quarter. BlackLine added 76 net new customers, increasing its total customers to 2,707 and increasing its customer user base to just under 227,000, marking annual increases of 18% and 12%, respectively. The company's asset-lite software business also allows it to realize a sky-high gross margin, which clocked in at 83% this quarter.

After reviewing the company's conference call following its earnings release, here are what I believe are the biggest takeaways from the quarter.

Man punching numbers into a calculator while looking at a spreadsheet.

BlackLine's accounting software-as-a-service platform is obviously resonating with customers, as its customer renewal rate was 97% this quarter. Image source: Getty Images.

Fulfilling a pressing need

When evaluating many enterprise software companies, it can be hard for those who don't use this type of software -- like me -- to determine exactly how valuable the services being offered are to potential customers. Not so with BlackLine; indeed, the best argument for investing in BlackLine is that it so obviously fulfills a real need for corporations. During the conference call, founder and CEO Therese Tucker clearly explained the company's value proposition:

Any competitor or new entrant offering only workflow functionality around the financial close process without automation and business intelligence will still require accountants to perform manual processes, such as journal entries and reconciliations in Excel. ... From the beginning, BlackLine has incorporated automation engines into end-to-end accounting processes. These engines enable automation of the journal entry processes, multilevel reconciliations...intelligent transaction matching and other accounting processes in addition to streamlining the accounting workflow and enforcing segregation of duties.

To drive this point home, Tucker said that 82% of customers' reconciliations were done automatically, "without any manual review or interaction." You don't have to be an accountant to understand why a large business would find such a service valuable, and the company's customers seem to agree. In Q1, BlackLine's customer renewal rate was 97%, representing an incredibly low rate of churn.

A growing ecosystem

BlackLine has also worked hard to introduce new strategic products to expand its revenue from existing customers. These services perform accounting tasks such as managing and settling intracompany transactions, simplifying the financial close process, and automating transaction matching and reconciliation. In Q1, revenue from these strategic products represented 19% of total sales. The company's net revenue retention rate was 108%, meaning that existing customers from 2018's first quarter spent 8% more this year than they did last year.

Again, the value proposition of these services seems obvious when explained. For instance, Tucker gave another example of how these services benefit BlackLine's clients:

[O]ne of our large technology clients [has] 60 different payroll processes...and they have payroll logs and journals coming in from 60 different places around the world. And they spend 50% of the time for a team of 12 to 15 people simply reconciling those. We were able to take their payroll logs and then subsequently generate automated journals from those payroll logs and give them back all of that time.

A different sales pitch

BlackLine's sales force is another anomaly, because it carries no quotas but focuses instead on educating and helping the customer. Last year, BlackLine also launched its accounting innovation team, which has already spent 3,000 hours hosting multi-day, on-site workshops for more than 40 clients. These workshops teach users best practices for BlackLine's software and help companies map out their digital finance journeys.

In Q1, BlackLine saw twice as many users complete BlackLine U, the company's online training program, as did in 2018's first quarter. Similarly, seven times the users now attend live training events as attended in 2018's first quarter. This emphasis on training and customer satisfaction creates "lifelong BlackLine advocates" and emphasizes long-term customer relationships and customer acquisition by word of mouth rather than pushy sales teams.

A long runway of growth yet

BlackLine's trailing-12-month revenue of $240 million gives shares of the company a price-to-sales ratio of a little over 11. While that is certainly steep, it's much less than the price-to-sales ratios that other (admittedly faster-growing) SaaS stocks are currently fetching.

Most enticing about BlackLine is that its market cap is still under $3 billion, seemingly far less than its total addressable market. This shows that BlackLine could still have a long runway of growth ahead yet, with a service that fills a huge need for its customers and simultaneously allows for such high margins. Given BlackLine's dedication to the long-term success and continued education of its customers, this seems like a decent bet, which is why BlackLine still holds a spot in my own portfolio.