Hang on to your Blackline Safety stock, this analyst says

ATB Capital Markets analyst Martin Toner maintained his “Outperform” rating and $10.00 price target on Blackline Safety (Blackline Safety Stock Quote, Chart, News, Analysts, Financials TSX:BLN) in a June 11 update after the company reported solid Q2 2025 results that included record recurring revenue and stronger-than-expected margins despite weaker product sales tied to U.S. tariff uncertainty.

Blackline Safety makes safety devices and connected cloud services that help protect workers and support digital transformation. Operating under a hardware-enabled Software as a Service (SaaS) model, the company offers real-time safety insights, gas detection, and emergency response tools. Its devices feature incident detection, manual alerts, wireless communication, and GPS tracking, with coverage in over 100 countries and access to more than 350 mobile networks.

Before markets opened on June 10, Blackline Safety reported Q2 2025 revenue of $35.9-million, up 14% year over year but below the $37.9-million consensus. It marked the company’s 33rd straight quarter of annual growth. Gross margin rose to 62.4%, beating expectations of 58.6% and up from 57.1% a year ago. Adjusted EBITDA came in at $1.0-million, ahead of the $0.4-million consensus, marking the fourth consecutive quarter of positive EBITDA. Annual recurring revenue hit a record $75.2-million, up 33% year over year, with net dollar retention rising to 128%.

“The company continues to grow profitability at a faster-than-expected pace,” Toner said. “Notably, management emphasized that the company remains ‘well-positioned’ in the face of tariffs (given most products are exempt). At the same time, BLN cited potential negative impacts on revenue and earnings from slowing global investment and additional costs on the business. On the call, management noted that the long-term growth trajectory remains intact despite near-term product weakness, which was driven by an April sales slowdown in reaction to tariff uncertainty.”

Toner said most of Blackline’s products are now USMCA-compliant and exempt from U.S. tariffs, which eliminates a significant operational risk.

“Due to the tariff exemption for USMCA-compliant products, Blackline adapted its plan to shift manufacturing to Houston and will continue production in Calgary,” he said.

In Q2, Blackline said tariff-related uncertainty slowed product purchases, especially in April, as customers hesitated, leading to reduced deal flow in the U.S. and, to a lesser extent, Europe. The company also recorded a $351,000 tariff expense on U.S.-bound inventory, which weighed on product margins. Management noted that while trade policy uncertainty could continue to affect global customers, Blackline’s USMCA compliance puts it in a strong position to avoid future tariff-related costs.

“If the current tariffs remain in place, BLN should actually benefit as U.S. competitors will pay tariffs on components, while BLN will not,” Toner said.

Blackline launched its EXO 8 monitor in September 2024, a device featuring advanced technology designed for large industrial sectors, including oil, gas, and wastewater. Management sees it as a key driver of future product demand. The first units shipped during the quarter, and the company reported strong early interest, receiving 21 orders on the launch day alone.

“These orders were primarily for small quantities (ones and twos), indicating early adoption in niche markets,” Toner said. “BLN plans to announce an expansion module for the EXO 8 series soon, which will add detection capabilities for four additional gases. Management believes this will further strengthen and broaden the product’s applicability, enhancing its appeal in emergency response markets.”

Toner expects Blackline Safety to generate $5.5-million in Adjusted EBITDA on $156.8-million in revenue for fiscal 2025. He forecasts those figures will improve to $19.9-million in EBITDA on $196.8-million in revenue in fiscal 2026.

-30-