Entity information:

• Entity registrant name: BLACKLINE, INC.
• CIK: 0001666134
• SEC filing page: http://www.sec.gov/Archives/edgar/data/1666134/000156459018004923/0001564590-18-004923-index.htm
• XBRL Instance: http://www.sec.gov/Archives/edgar/data/1666134/000156459018004923/bl-20171231.xml
• XBRL Cloud Viewer: https://edgardashboard.xbrlcloud.com/flex/viewer/XBRLViewer.html#instance=http://www.sec.gov/Archives/edgar/data/1666134/000156459018004923/bl-20171231.xml
• EDGAR Dashboard: https://edgardashboard.xbrlcloud.com/edgar-dashboard/?cik=0001666134
• Generator: Donnelley Financial Solutions
• Total assets: 440,884,000
• Income tax expense (benefit): 567,000
• Found reconcilation from statutory to effective rates: True
• Found income tax policy: Coming soon!

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Note 8—Income Taxes

The components of income (loss) before income taxes for the years ended December 31, 2017, 2016, and 2015 were as follows (in thousands):

 

 

The components of the total provision for (benefit from) income taxes for the years ended December 31, 2017, 2016, and 2015 were as follows (in thousands):

 

A reconciliation of the statutory U.S. federal income tax rate to the Company’s effective tax rate for the years ended December 31, 2017, 2016, and 2015 was as follows:

 

In December 2017, the U.S. Congress passed and the President signed legislation commonly referred to as the Tax Cuts and Jobs Act (“the Tax Act”), which contains many significant changes to the U.S. tax laws including reducing the U.S. federal corporate tax rate from 35% to 21% and creating a territorial tax system with a onetime mandatory tax on previously deferred foreign earnings of U.S. subsidiaries. As the Company has a full valuation allowance against its U.S. deferred tax assets, the revaluation of net deferred tax assets resulting from the reduction in the U.S federal corporate income tax rate did not impact the Company’s effective tax rate.  In addition, due to cumulative foreign deficits, no liability for foreign earnings and profits has been established. Additional guidance may be issued by the U.S. Treasury Department, the IRS or other standard-setting bodies, which may result in adjustments to the amounts recorded. 

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2017 and 2016 were as follows (in thousands):

 

ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is "more likely than not." A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. Realization of future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period. For financial reporting purposes, the Company has incurred losses for each of the past three years. Based on available objective evidence, including the Company’s history of losses, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided a valuation allowance against its federal and state deferred tax assets.  The Company’s foreign tax jurisdictions were in a net deferred tax liability position at December 31, 2017.

The change in the valuation allowance was as follows (in thousands).

 

 

The Company did not provide for United States income taxes on the undistributed earnings and other outside temporary differences of foreign subsidiaries as they are considered indefinitely reinvested outside the United States. At December 31, 2017 and 2016 the amount of temporary differences related to undistributed earnings and other outside temporary differences upon which United States income taxes have not been provided is immaterial to these consolidated financial statements.

 

At December 31, 2017, the Company had consolidated federal and state net operating loss carryforwards available to offset future taxable income of approximately $122.3 million and $60.3 million, respectively. The federal losses will begin to expire in 2033, and the state losses will begin to expire between 2023 and 2033, depending on the jurisdiction.  The Company has federal research and development credits and foreign tax credits of $2.2 million and $1.2 million, respectively, which begin to expire on 2033 and 2023, respectively.  The Company has state research and development credits and enterprise zone credits of $2.6 million and $0.6 million, respectively, which are indefinite in expiration and begin to expire by 2023, respectively.  Pursuant to Internal Revenue Code Section 382, use of the Company’s net operating loss carryforwards may be limited if the Company experiences a cumulative change in ownership of more than 50% over a three-year period.

   

The following is a roll forward of the Company’s total gross unrecognized tax benefits (in thousands):

 

 

At December 31, 2017, the realization of unrecognized tax benefits are not expected to impact the effective rate due to a full valuation on federal and state deferred taxes.  The Company has not recorded any interest or penalties in its provision for (benefit from) income taxes for the years ended December 31, 2017, 2016, and 2015 and no such amounts have been accrued at December 31, 2017 and 2016.  

 

The Company files U.S. federal, various state and foreign income tax returns. In the normal course of business, the Company is subject to examination by taxing authorities. The tax years 2015 and 2016 remain subject to examination for federal purposes.  Generally, state and foreign tax authorities may examine the Company’s tax returns for four years and five years, respectively, from the date an income tax return is filed. However, the taxing authorities may continue to adjust the Company’s federal and state net operating loss carryforwards until the statute of limitations closes on the tax years in which the federal and state net operating losses are utilized.

The Company does not anticipate either material changes in the total amount or composition of its unrecognized tax benefits within 12 months of the reporting date.