What happened

Shares of BlackLine (BL -0.38%) charged sharply higher Friday, surging as much as 11.1%. As of 11:49 a.m. ET, the stock was still up 6.7%.

The catalyst that sent the cloud-based accounting and finance company higher was quarterly results that showed the sky was not falling.

So what

For Q1, BlackLine reported revenue of $139 million, up 16% year over year, resulting in a loss per share of $0.20. The results were better when viewed on an non-GAAP (adjusted) basis, with earnings per share (EPS) of $0.34, up from $0.01 in the prior-year period. 

Analysts' consensus estimates were calling for $138.1 million in revenue and EPS of $0.16, so BlackLine exceeded expectations by a wide margin. 

Helping fuel the better-than-expected results was strong customer growth, which rose to more than 4,200, up 9% year over year, while its user base of more than 369,000 also climbed 9%. Not only is BlackLine attracting new clients, but existing customers are also spending more, as evidenced by its dollar-based net revenue retention rate of 106%. Put another way, existing customers spent 6% more this quarter than in the corresponding period last year.

Investors were also excited about management's announcement that BlackLine no longer plans to focus solely on growth and will prioritize the "overall performance of the business" (read: profitability).

Also helping to buttress the results was BlackLine's cash generation, with operating cash flow of $22.9 million and free cash flow of $14.3 million, both much improved compared to the prior-year quarter. This shows that while the company is still unprofitable on a GAAP basis -- this is the result of non-cash items like depreciation -- profitability is only a matter of time.

Now what

BlackLine expects its solid growth to continue. Management is guiding for revenue of about $144 million, up 12% year over year at the midpoint of its guidance. Investors had feared the worst in recent months as economic headwinds caused a slowing of cloud computing adoption, but the results helped quell those fears.

Given its solid execution and equally solid growth, BlackLine stock is a buy.