If you've never worked in an accounting department, it's difficult to imagine month-end or quarter-end close, a process that involves reconciling every transaction that occurred during the period. It's among the most time-consuming and intense jobs that accountants perform, as they must ensure that transactions are recorded in the correct period, reconciliations are conducted, and recurring entries are posted.

Software-as-a-service specialist BlackLine (NASDAQ:BL) helps make it much less onerous by breaking the process into manageable chunks that are performed on a daily basis, solving a problem that has long vexed accountants. As a result, users are flocking to its system and the company is thriving.

When BlackLine reported its second-quarter financial results on Thursday, they were better than investors imagined, sending the stock soaring more than 30% on Friday.

A keyboard button with the inscription "When your transaction finds its perfect match -- BlackLine.

Image source: BlackLine.

Impressive growth continues

BlackLine reported revenue of $69.7 million, up 26% year over year, easily surpassing analysts' consensus estimates of $68 million, while also exceeding the high end of management's guidance, which topped out at $68.4 million. The strong results also translated to robust growth on the bottom line.

The company isn't yet profitable, since it has been pouring resources into expanding its market share and fueling growth. As a result, it generated a net loss under generally accepted accounting principles (GAAP) of $5.2 million, a loss per share of $0.09. But it was an improvement over the loss of $8.5 million, or $0.16 per share, that it generated in the year-ago quarter. Adjusted net income of $6.1 million resulted in adjusted earnings per share of $0.10, soaring tenfold from the prior-year quarter and eclipsing expectations of $0.01.

Solid operational metrics

BlackLine's ability to solve an age-old problem for accountants is resonating with its target market. It's not only attracting new customers, but expanding its services to existing users.

The company added 106 net new customers during the quarter, similar to the 105 added in the prior-year quarter. This brought the total number of customers to 2,813 and expanded its user base to 236,802, up 17% and 13% year over year, respectively.

Just as important to the long-term growth picture is the BlackLine strategy of "land and expand" -- adding new customers, then introducing them to additional product lines, while helping them deploy additional users. This led to a dollar-based retention rate for the period of 108%.

Bullish on the future

As a result of the blowout quarter, BlackLine raised its full-year guidance to reflect its growing opportunity. It now expects revenue in a range of $281 million to $284 million, which would represent growth of 24% year over year at the midpoint. Wall Street was only forecasting revenue of $279 million for the year, so investors were cheering the beat and raise. 

The company is also forecasting adjusted net income between $13 million and $15 million, which would result in adjusted EPS of $0.22 to $0.25 -- an increase of more than 100% year over year across both metrics.

For the upcoming third quarter, BlackLine anticipates revenue in a range of $71.7 million to $72.7 million, up 23% year over year at the midpoint, and sailing past the $71.29 million expected by those who follow the stock. Management is also forecasting adjusted EPS between $0.02 and $0.04, versus Wall Street expectations for $0.04. Given the company's history of conservative guidance, it may well be lowballing the number.

The investor takeaway

BlackLine went public less than three years ago, and since then, its quarterly revenue has more than doubled -- and the stock has followed suit. The company continues to add customers, expand the user base among existing ones, and develop new products to make accountants' lives easier.

Management estimates that the core addressable market for its products is about $18 billion, so considering that it expects full-year revenue of about $284 million, BlackLine is likely just getting started. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.