- First quarter total revenue grew 31% year over year to $219.9
million
- First quarter operating cash flow of $34.6 million and free
cash flow of $31.3 million
- Ended the quarter with cash, cash equivalents, and short-term
investments of $489.5 million
Smartsheet Inc. (NYSE: SMAR), the enterprise platform for modern
work management, today announced financial results for its first
fiscal quarter ended April 30, 2023.
“Our fiscal year is off to a solid start,” said Mark Mader,
President and CEO of Smartsheet. “We continued to drive growth this
quarter, exceeding our guidance on both the top and bottom line. We
are seeing strong demand from our enterprise customers, who
continue to choose Smartsheet to help them accomplish their mission
critical work and solve their toughest problems. Looking ahead,
we’re planning to expand the AI-based capabilities in our platform
to help our customers unlock new, higher value work.”
First Quarter Fiscal 2024 Financial Highlights
- Revenue: Total revenue was $219.9 million, an increase
of 31% year over year. Subscription revenue was $206.0 million, an
increase of 33% year over year. Professional services revenue was
$13.9 million, an increase of 7% year over year.
- Operating Income (Loss): GAAP operating loss was $(32.1)
million, or (15)% of total revenue, compared to $(69.8) million, or
(41)% of total revenue, in the first quarter of fiscal 2023.
Non-GAAP operating income was $22.8 million, or 10% of total
revenue, compared to non-GAAP operating loss of $(23.1) million, or
(14)% of total revenue, in the first quarter of fiscal 2023.
- Net Income (Loss): GAAP net loss was $(29.9) million,
compared to GAAP net loss of $(70.5) million in the first quarter
of fiscal 2023. GAAP net loss per share was $(0.23), compared to
GAAP net loss per share of $(0.55) in the first quarter of fiscal
2023. Non-GAAP net income was $25.0 million, compared to non-GAAP
net loss of $(23.7) million in the first quarter of fiscal 2023.
Non-GAAP basic and diluted net income per share was $0.19 and
$0.18, compared to non-GAAP basic and diluted net loss per share of
$(0.18) in the first quarter of fiscal 2023.
- Cash Flow: Net operating cash flow was $34.6 million,
compared to $(5.1) million in the first quarter of fiscal 2023.
Free cash flow was $31.3 million, compared to $(9.1) million in the
first quarter of fiscal 2023.
First Quarter Fiscal 2024 Operational Highlights
- Calculated billings were $215.5 million, representing
year-over-year growth of 20%
- Dollar-based net retention rate was 123%
- Number of all customers with annualized contract values ("ACV")
of $100,000 or more grew to 1,569, an increase of 42% year over
year
- Number of all customers with ACV of $50,000 or more grew to
3,343, an increase of 33% year over year
- Number of all customers with ACV of $5,000 or more grew to
18,483, an increase of 16% year over year
- Average ACV per domain-based customer increased to $8,520, an
increase of 18% year over year
First Quarter Fiscal 2024 Business Highlights
- Launched Free Plan, which lets individuals and small teams get
started with task and project management in Smartsheet for
free
- Released new dashboard features that will make customers’
dashboards more informative, visually appealing, and on brand
- Enabled Control Center to support multiple thousands of
projects, and we're on track to be able to support multiple
tens-of-thousands of projects per Control Center instance by the
end of the fiscal year in January
- Named to Fast Company’s annual list of the World’s Most
Innovative Companies, ranking in the top ten of the Enterprise
category
The section titled "Use of Non-GAAP Financial Measures" below
contains a description of the non-GAAP financial measures with a
reconciliation between GAAP and non-GAAP information. The section
titled "Definitions of Business Metrics" contains definitions of
certain non-financial metrics provided within this earnings
release.
Financial Outlook
For the second quarter of fiscal year 2024, the Company
currently expects:
- Total revenue of $228 million to $231 million, representing
year-over-year growth of 22% to 24%
- Non-GAAP operating income of $7 million to $9 million
- Non-GAAP net income per share of $0.07 to $0.08, assuming
diluted weighted average shares outstanding of approximately 138.5
million
For the full fiscal year 2024, the Company currently
expects:
- Total revenue of $943 million to $948 million, representing
year-over-year growth of 23% to 24%
- Non-GAAP operating income of $43 million to $53 million
- Non-GAAP net income per share of $0.37 to $0.44, assuming
diluted weighted average shares outstanding of approximately 139.0
million
- Calculated billings year-over-year growth of 20%
- Free cash flow of $110 million
We have not reconciled free cash flow guidance to net cash from
operating activities because we do not provide guidance on the
reconciling items between net cash from operating activities and
free cash flow, due to the uncertainty regarding, and the potential
variability of, these items. The actual amount of such reconciling
items will have a significant impact on our free cash flow.
Accordingly, a reconciliation of net cash from operating activities
to free cash flow guidance is not available without unreasonable
effort. We do not provide reconciliation of calculated billings
guidance as its components are solely revenue and deferred revenue,
and guidance for revenue is already provided.
Conference Call Information
Smartsheet will host a conference call and live webcast for
analysts and investors at 1:30 p.m. Pacific Time on June 7, 2023. A
live webcast and accompanying presentation can be accessed on the
Investor Relations section of the Company's website at:
https://investors.smartsheet.com. The conference call can also be
accessed by dialing (888) 440-6385, or +1 (646) 960-0180 (outside
of the US). The conference ID is 7672979. A replay of the call via
webcast will be available at https://investors.smartsheet.com or by
dialing (800) 770-2030 or +1 (647) 362-9199 (outside of the US).
The dial-in replay will be available until the end of day on June
14, 2023. The webcast replay will be available for one year.
Forward-Looking Statements
This press release contains “forward-looking” statements that
are based on our management’s beliefs and assumptions and on
information currently available to management. Forward-looking
statements include, but are not limited to, statements about
Smartsheet’s outlook for the second fiscal quarter ending July 31,
2023, and the full fiscal year ending January 31, 2024, and
Smartsheet’s expectations regarding possible or assumed business
strategies, potential growth and innovation opportunities, new
products, and potential market opportunities.
Forward-looking statements generally relate to future events or
our future financial or operating performance. Forward-looking
statements include all statements that are not historical facts and
can be identified by terms such as “believe,” “continue,” “could,”
“potential,” “remain,” “will,” “would,” or similar expressions and
the negatives of those terms. Forward-looking statements involve
known and unknown risks, uncertainties and other factors that may
cause our actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. These risks include, but are not limited to, risks and
uncertainties related to: our ability to achieve future growth and
sustain our growth rate; our ability to attract and retain
customers and increase sales to our customers; our ability to
develop and release new products and services and to scale our
platform; our ability to increase adoption of our platform through
our self-service model; our ability to maintain and grow our
relationships with strategic partners; the highly competitive and
rapidly evolving market in which we participate; our ability to
identify targets for, execute on, or realize the benefits of,
potential acquisitions; and our international expansion strategies.
Further information on risks that could cause actual results to
differ materially from forecasted results is included in our
filings with the SEC, including our Quarterly Report on Form 10-Q
for the quarter ended April 30, 2023 to be filed with the SEC. Any
forward-looking statements contained in this press release are
based on assumptions that we believe to be reasonable as of this
date. Except as required by law, we assume no obligation to update
these forward-looking statements, or to update the reasons if
actual results differ materially from those anticipated in the
forward-looking statements.
Use of Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements,
which are prepared and presented in accordance with GAAP, we use
certain non-GAAP financial measures, as described below, to
understand and evaluate our core operating performance. These
non-GAAP financial measures, which may be different than similarly
titled measures used by other companies, are presented to enhance
investors’ overall understanding of our financial performance and
should not be considered a substitute for, or superior to, the
financial information prepared and presented in accordance with
GAAP. Investors are encouraged to review the reconciliation of
these non-GAAP measures to their most directly comparable GAAP
financial measures. A reconciliation of the non-GAAP financial
measures to such GAAP measures can be found in the accompanying
financial statements included with this press release.
We believe that these non-GAAP financial measures provide useful
information about our financial performance, enhance the overall
understanding of our past performance and future prospects, and
allow for greater transparency with respect to important metrics
used by our management for financial and operational
decision-making. We are presenting these non-GAAP financial metrics
to assist investors in seeing our financial performance through the
eyes of management, and because we believe that these measures
provide an additional tool for investors to use in comparing our
core financial performance over multiple periods with other
companies in our industry.
We define non-GAAP operating income (loss) as GAAP operating
loss excluding share-based compensation expense, amortization of
acquisition-related intangible assets, one-time costs associated
with mergers and acquisitions, lease restructuring costs, and
litigation expenses and settlements related to matters that are
outside the ordinary course of our business. We define non-GAAP net
income (loss) as GAAP net loss excluding non-recurring income tax
adjustments associated with mergers and acquisitions and the same
exclusions that are used to derive non-GAAP operating income
(loss). We define basic non-GAAP net income (loss) per share as
non-GAAP net income (loss) divided by weighted-average shares
outstanding ("WASO"). We define diluted non-GAAP net income per
share as non-GAAP net income divided by diluted WASO. Diluted WASO
includes the impact of potentially dilutive securities, which
include stock options, restricted share units, performance share
units, and shares subject to our 2018 employee stock purchase plan.
If there is a non-GAAP net loss, basic and diluted loss per share
are the same number as all potentially dilutive securities would
have an antidilutive impact. There are a number of limitations
related to the use of these non-GAAP measures as compared to GAAP
operating loss and net loss, including that the non-GAAP measures
exclude share-based compensation expense, which has been, and will
continue to be for the foreseeable future, a significant recurring
expense in our business and an important part of our compensation
strategy.
We use the non-GAAP financial measure of free cash flow, which
is defined as GAAP net cash flows from operating activities,
reduced by cash used for purchases of property and equipment
(inclusive of spend on internal-use software). We believe free cash
flow is an important liquidity measure of the cash that is
available, after capital expenditures and operational expenses, for
investment in our business and to make acquisitions. Free cash flow
is useful to investors as a liquidity measure because it measures
our ability to generate or use cash. Once our business needs and
obligations are met, cash can be used to maintain a strong balance
sheet and invest in future growth. There are a number of
limitations related to the use of free cash flow as compared to net
cash from operating activities, including that free cash flow
includes capital expenditures, the benefits of which are realized
in periods subsequent to those when expenditures are made.
We define calculated billings as total revenue plus the change
in deferred revenue in the period. Because we recognize
subscription revenue ratably over the subscription term, calculated
billings can be used to measure our subscription sales activity for
a particular period, to compare subscription sales activity across
particular periods, and as an indicator of future subscription
revenue.
Definitions of Business Metrics
Average ACV per domain-based customer
We define average ACV per domain-based customer as total
outstanding ACV for domain-based subscriptions as of the end of the
reporting period divided by the number of domain-based customers as
of the same date. We define domain-based customers as organizations
with a unique email domain name.
Dollar-based net retention rate
We calculate dollar-based net retention rate as of a period end
by starting with the ACV from the cohort of all customers as of the
12 months prior to such period end, or prior period ACV. We then
calculate the ACV from these same customers as of the current
period end, or current period ACV. Current period ACV includes any
upsells and is net of contraction or attrition over the trailing 12
months, but excludes subscription revenue from new customers in the
current period. We then divide the total current period ACV by the
total prior period ACV to arrive at the dollar-based net retention
rate. Any ACV obtained through merger and acquisition transactions
does not affect the dollar-based net retention rate until one year
from the date on which the transaction closed.
About Smartsheet
Smartsheet (NYSE: SMAR) is the enterprise platform for modern
work management. By aligning people and technology so organizations
can move faster and drive innovation, Smartsheet enables its
millions of users to achieve more. Visit www.smartsheet.com to
learn more.
Disclosure of Material Information
Smartsheet announces material information to its investors using
SEC filings, press releases, public conference calls, and on its
investor relations page of the company’s website at
https://investors.smartsheet.com.
SMARTSHEET INC.
Condensed Consolidated
Statements of Operations
(in thousands, except per
share data)
(unaudited)
Three Months Ended April
30,
2023
2022
Revenue
Subscription
$
206,001
$
155,276
Professional services
13,885
13,034
Total revenue
219,886
168,310
Cost of revenue
Subscription
33,167
25,138
Professional services
12,714
12,020
Total cost of revenue
45,881
37,158
Gross profit
174,005
131,152
Operating expenses
Research and development
56,190
52,519
Sales and marketing
114,952
115,391
General and administrative
34,978
33,044
Total operating expenses
206,120
200,954
Loss from operations
(32,115
)
(69,802
)
Interest income
5,217
388
Other income (expense), net
(536
)
(828
)
Loss before income tax provision
(27,434
)
(70,242
)
Income tax provision
2,436
215
Net loss
$
(29,870
)
$
(70,457
)
Net loss per share, basic and diluted
$
(0.23
)
$
(0.55
)
Weighted-average shares outstanding used
to compute net loss per share, basic and diluted
132,542
128,519
Share-based compensation expense included
in the condensed consolidated statements of operations was as
follows (in thousands, unaudited):
Three Months Ended April
30,
2023
2022
Cost of subscription revenue
$
3,459
$
2,611
Cost of professional services revenue
1,910
1,477
Research and development
17,432
15,615
Sales and marketing
19,054
14,745
General and administrative
9,924
9,452
Total share-based compensation expense
$
51,779
$
43,900
SMARTSHEET INC.
Condensed Consolidated Balance
Sheets
(in thousands, except share
data)
(unaudited)
April 30, 2023
January 31, 2023
Assets
Current assets
Cash and cash equivalents
$
294,946
$
223,156
Short-term investments
194,593
233,225
Accounts receivable, net of allowances of
$5,586 and $6,285, respectively
152,104
198,643
Prepaid expenses and other current
assets
68,025
55,063
Total current assets
709,668
710,087
Restricted cash
189
197
Deferred commissions
129,058
121,785
Property and equipment, net
39,162
39,395
Operating lease right-of-use assets
51,123
54,278
Intangible assets, net
36,097
39,069
Goodwill
141,518
142,415
Other long-term assets
3,135
2,983
Total assets
$
1,109,950
$
1,110,209
Liabilities and shareholders’
equity
Current liabilities
Accounts payable
$
1,727
$
2,125
Accrued compensation and related
benefits
53,106
68,347
Other accrued liabilities
28,783
27,437
Operating lease liabilities, current
19,299
19,220
Deferred revenue
453,831
457,534
Total current liabilities
556,746
574,663
Operating lease liabilities,
non-current
43,372
47,564
Deferred revenue, non-current
1,530
2,195
Other long-term liabilities
337
129
Total liabilities
601,985
624,551
Shareholders’ equity
Preferred stock, no par value; 10,000,000
shares authorized, no shares issued or outstanding as of April 30,
2023 and January 31, 2023
—
—
Class A common stock, no par value;
500,000,000 shares authorized, 132,912,458 shares issued and
outstanding as of April 30, 2023; 500,000,000 shares authorized,
131,845,028 shares issued and outstanding as of January 31,
2023
—
—
Class B common stock, no par value;
500,000,000 shares authorized, no shares issued and outstanding as
of April 30, 2023; 500,000,000 shares authorized, no shares issued
and outstanding as of January 31, 2023
—
—
Additional paid-in capital
1,296,364
1,243,730
Accumulated other comprehensive income
(loss)
(356
)
101
Accumulated deficit
(788,043
)
(758,173
)
Total shareholders’ equity
507,965
485,658
Total liabilities and shareholders’
equity
$
1,109,950
$
1,110,209
SMARTSHEET INC.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended April
30,
2023
2022
Cash flows from operating
activities
Net loss
$
(29,870
)
$
(70,457
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Share-based compensation expense
51,779
43,900
Depreciation and amortization
6,410
6,078
Net amortization of premiums (discounts)
on investments
(2,028
)
(49
)
Amortization of deferred commission
costs
11,429
13,077
Unrealized foreign currency loss
381
589
Non-cash operating lease costs
3,155
3,899
Other, net
872
—
Changes in operating assets and
liabilities:
Accounts receivable
45,746
31,489
Prepaid expenses and other current
assets
(6,981
)
(13,103
)
Other long-term assets
(267
)
32
Accounts payable
(246
)
5,688
Other accrued liabilities
1,581
5,595
Accrued compensation and related
benefits
(20,552
)
(23,790
)
Deferred commissions
(18,701
)
(15,895
)
Deferred revenue
(4,452
)
11,761
Other long-term liabilities
210
—
Operating lease liabilities
(3,895
)
(3,867
)
Net cash provided by (used in) operating
activities
34,571
(5,053
)
Cash flows from investing
activities
Purchases of short-term investments
(62,010
)
(207,274
)
Maturities of short-term investments
96,885
—
Proceeds from liquidation of a long-term
investment
—
622
Purchases of property and equipment
(853
)
(1,691
)
Proceeds from sale of property and
equipment
16
94
Capitalized internal-use software
development costs
(2,397
)
(2,323
)
Net cash provided by (used in) investing
activities
31,641
(210,572
)
Cash flows from financing
activities
Proceeds from exercise of stock
options
532
1,370
Taxes paid related to net share settlement
of restricted stock units
(621
)
(1,366
)
Proceeds from contributions to Employee
Stock Purchase Plan
5,783
6,804
Net cash provided by financing
activities
5,694
6,808
Effects of changes in foreign currency
exchange rates on cash, cash equivalents, and restricted cash
(108
)
(821
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
71,798
(209,638
)
Cash, cash equivalents, and restricted
cash at beginning of period
223,757
449,680
Cash, cash equivalents, and restricted
cash at end of period
$
295,555
$
240,042
Supplemental disclosures
Cash paid for income tax
$
69
$
68
Accrued purchases of property and
equipment, including internal-use software
503
789
Share-based compensation expense
capitalized in internal-use software development costs
803
748
Right-of-use assets obtained in exchange
for new operating lease liabilities
—
4,464
SMARTSHEET INC.
Reconciliation from GAAP to
Non-GAAP Financial Measures
(unaudited)
Reconciliation from GAAP to non-GAAP
operating income (loss) and operating margin
Three Months Ended April
30,
2023
2022
(dollars in thousands)
Loss from operations
$
(32,115
)
$
(69,802
)
Add:
Share-based compensation expense(1)
52,200
44,228
Amortization of acquisition-related
intangible assets(2)
2,709
2,483
Lease restructuring costs(3)
6
—
Non-GAAP operating income (loss)
$
22,800
$
(23,091
)
Operating margin
(15
)%
(41
)%
Non-GAAP operating margin
10
%
(14
)%
(1)
Includes amortization related to
share-based compensation that was capitalized in internal-use
software and other assets in previous periods.
(2)
Consists entirely of amortization of
intangible assets that were recorded as part of purchase
accounting. The amortization of intangible assets related to
acquisitions will recur in future periods until such intangible
assets have been fully amortized.
(3)
Includes charges related to the
reassessment of our real estate lease portfolio.
Reconciliation from GAAP to non-GAAP
net income (loss)
Three Months Ended April
30,
2023
2022
(in thousands)
Net loss
$
(29,870
)
$
(70,457
)
Add:
Share-based compensation expense(1)
52,200
44,228
Amortization of acquisition-related
intangible assets(2)
2,709
2,483
Lease restructuring costs(3)
6
—
Non-GAAP net income (loss)
$
25,045
$
(23,746
)
Non-GAAP net income (loss) per share,
basic
$
0.19
$
(0.18
)
Non-GAAP net income (loss) per share,
diluted
$
0.18
$
(0.18
)
(1)
Includes amortization related to
share-based compensation that was capitalized in internal-use
software and other assets in previous periods.
(2)
Consists entirely of amortization of
intangible assets that were recorded as part of purchase
accounting. The amortization of intangible assets related to
acquisitions will recur in future periods until such intangible
assets have been fully amortized.
(3)
Includes charges related to the
reassessment of our real estate lease portfolio.
Non-GAAP reconciliation from basic to
diluted weighted-average shares outstanding
Three Months Ended April
30,
2023
2022
(in thousands)
Weighted-average shares outstanding;
basic
132,542
128,519
Effect of dilutive securities:
Shares subject to outstanding common stock
awards
4,186
—
Non-GAAP weighted-average shares
outstanding; diluted
136,728
128,519
SMARTSHEET INC.
Reconciliation from GAAP to
Non-GAAP Financial Measures
(unaudited)
Reconciliation from net operating cash
flow to free cash flow
Three Months Ended April
30,
2023
2022
(in thousands)
Net cash provided by (used in) operating
activities
$
34,571
$
(5,053
)
Less:
Purchases of property and equipment
(853
)
(1,691
)
Capitalized internal-use software
development costs
(2,397
)
(2,323
)
Free cash flow
$
31,321
$
(9,067
)
Reconciliation from revenue to
calculated billings
Three Months Ended April
30,
2023
2022
(in thousands)
Total revenue
$
219,886
$
168,310
Add:
Deferred revenue (end of period)
455,362
346,423
Less:
Deferred revenue (beginning of period)
459,729
334,662
Calculated billings
$
215,519
$
180,071
SMARTSHEET INC.
Reconciliation from GAAP to
Non-GAAP Financial Measures
(unaudited)
Reconciliation from GAAP operating loss
to non-GAAP operating income guidance
Q2 FY 2024
FY 2024
Low
High
Low
High
(in millions)
Loss from operations
$
(52.7
)
$
(50.7
)
$
(187.4
)
$
(177.4
)
Add:
Share-based compensation expense(1)
56.0
56.0
218.0
218.0
Amortization of acquisition-related
intangible assets(2)
2.7
2.7
10.9
10.9
Lease restructuring costs(3)
1.0
1.0
1.5
1.5
Non-GAAP operating income
$
7.0
$
9.0
$
43.0
$
53.0
(1)
Includes amortization related to
share-based compensation that was capitalized in internal-use
software and other assets in previous periods.
(2)
Consists entirely of amortization of
intangible assets that were recorded as part of purchase
accounting. The amortization of intangible assets related to
acquisitions will recur in future periods until such intangible
assets have been fully amortized.
(3)
Includes charges related to the
reassessment of our real estate lease portfolio.
Reconciliation from GAAP net loss to
non-GAAP net income guidance
Q2 FY 2024
FY 2024
Low
High
Low
High
(in millions)
Net loss
$
(50.7
)
$
(48.7
)
$
(178.4
)
$
(168.4
)
Add:
Share-based compensation expense(1)
56.0
56.0
218.0
218.0
Amortization of acquisition-related
intangible assets(2)
2.7
2.7
10.9
10.9
Lease restructuring costs(3)
1.0
1.0
1.5
1.5
Non-GAAP net income
$
9.0
$
11.0
$
52.0
$
62.0
(1)
Includes amortization related to
share-based compensation that was capitalized in internal-use
software and other assets in previous periods.
(2)
Consists entirely of amortization of
intangible assets that were recorded as part of purchase
accounting. The amortization of intangible assets related to
acquisitions will recur in future periods until such intangible
assets have been fully amortized.
(3)
Includes charges related to the
reassessment of our real estate lease portfolio.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230607005712/en/
Smartsheet Inc. Investor Relations Contact Aaron
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