SMAR Smartsheet Inc

• Second quarter total revenue grew 17% year over year to $276.4 million
• Annualized recurring revenue grew 17% year over year to $1.093 billion
• Second quarter operating cash flow of $59.1 million and record free cash flow of $57.2 million
• Ended the quarter with cash, cash equivalents, and short-term investments of $706.6 million

Smartsheet Inc. (NYSE: SMAR), the enterprise work management platform, today announced financial results for its second fiscal quarter ended July 31, 2024.

"Q2 was a strong quarter highlighted by continued growth in the enterprise,” said Mark Mader, CEO of Smartsheet. “Our customers are scaling their work on Smartsheet, with over 70 customers expanding their Smartsheet annualized recurring revenue by more than $100,000 this quarter. We have a significant opportunity ahead to drive durable, long-term growth. We’ve been investing in product innovations that empower our customers to manage their work at an even larger scale on our platform, which we look forward to sharing more about at our annual customer conference, ENGAGE Seattle, in a few weeks."

Second Quarter Fiscal 2025 Financial Highlights

• Revenue: Total revenue was $276.4 million, an increase of 17% year over year. Subscription revenue was $263.5 million, an increase of 19% year over year. Professional services revenue was $12.9 million, a decrease of (8)% year over year.
• Operating loss: GAAP operating loss was $(8.5) million, or (3)% of total revenue, compared to $(36.1) million, or (15)% of total revenue, in the second quarter of fiscal 2024.
• Non-GAAP operating income: Non-GAAP operating income was $45.3 million, or 16% of total revenue, compared to $19.2 million, or 8% of total revenue, in the second quarter of fiscal 2024.
• Net income (loss): GAAP net income was $7.9 million, compared to GAAP net loss of $(33.4) million in the second quarter of fiscal 2024. GAAP basic and diluted net income per share was $0.06, compared to GAAP basic and diluted net loss per share of $(0.25) in the second quarter of fiscal 2024.
• Non-GAAP net income: Non-GAAP net income was $61.6 million, compared to $22.0 million in the second quarter of fiscal 2024. Non-GAAP basic and diluted net income per share was $0.45 and $0.44, respectively, compared to non-GAAP basic and diluted net income per share of $0.16 in the second quarter of fiscal 2024.
• Cash flow: Net operating cash flow was $59.1 million, compared to $48.5 million in the second quarter of fiscal 2024. Free cash flow was $57.2 million, or 21% of total revenue, compared to $45.5 million, or 19% of total revenue, in the second quarter of fiscal 2024.

Second Quarter Fiscal 2025 Operational Highlights

• Annualized recurring revenue ("ARR") was $1.093 billion, an increase of 17% year over year
• Average ARR per domain-based customer was $10,291, an increase of 16% year over year
• Dollar-based net retention rate was 113%
• Number of all customers with ARR of $100,000 or more grew to 2,056, an increase of 23% year over year
• Number of all customers with ARR of $50,000 or more grew to 4,140, an increase of 17% year over year
• Number of all customers with ARR of $5,000 or more grew to 20,198, an increase of 6% year over year

Second Quarter Fiscal 2025 Business Highlights

• Introduced a new subscription model to help customers realize more value by simplifying pricing, budgeting, and administration. The subscription model went into effect for new customers in June and existing customers will transition in the calendar year 2025
• Released board view, a new Kanban-style view that gives customers clear visibility into task status so they can see what’s in progress, what’s completed, and what’s coming up next at a glance
• Recognized with Customers’ Choice distinction in the 2024 Gartner® Peer Insights Voice of the Customer1 for the Collaborative Work Management market for the second year in a row
• Recognized as a “Vendor Who Shaped the Year” in two IDC reports: IDC, Worldwide Collaborative Applications Market Shares, 20232 and IDC, Worldwide Team Collaboration Applications Market Shares, 20233

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 Key Business Metrics" contains definitions of certain non-financial metrics provided within this earnings release.

Share Repurchase Program

In April 2024, Smartsheet’s Board of Directors authorized the repurchase of up to $150 million of the Company’s outstanding Class A common stock. As of July 31, 2024, Smartsheet has completed over $40 million in aggregate repurchases.

Financial Outlook

For the third quarter of fiscal year 2025, the Company currently expects:

• Total revenue of $282 million to $285 million, representing year-over-year growth of 15% to 16%
• Non-GAAP operating income of $42 million to $44 million
• Non-GAAP net income per share of $0.29 to $0.31, assuming diluted weighted-average shares outstanding of approximately 142.5 million

For the full fiscal year 2025, the Company currently expects:

• ARR of $1,177 million to $1,180 million, representing year-over-year growth of 14.2% to 14.5%
• Total revenue of $1,116 million to $1,121 million, representing year-over-year growth of 16% to 17%
• Non-GAAP operating income of $177 million to $182 million
• Non-GAAP net income per share of $1.36 to $1.39, assuming diluted weighted-average shares outstanding of approximately 141.9 million
• Free cash flow of $240 million

We have not reconciled free cash flow or diluted weighted-average shares outstanding guidance to their most directly comparable GAAP measure due to the uncertainty regarding, and the potential variability of, the related reconciling items. For those reasons, we are also unable to address the probable significance of the unavailable information. Accordingly, a reconciliation for free cash flow and diluted weighted-average shares outstanding guidance is not available without unreasonable effort.

_________________

1 GARTNER is a registered trademark and service mark, and PEER INSIGHTS is a trademark and service mark, of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved. Gartner Peer Insights content consists of the opinions of individual end users based on their own experiences with the vendors listed on the platform, should not be construed as statements of fact, nor do they represent the views of Gartner or its affiliates. Gartner does not endorse any vendor, product or service depicted in this content nor makes any warranties, expressed or implied, with respect to this content, about its accuracy or completeness, including any warranties of merchantability or fitness for a particular purpose. 

2 doc #US51376924, July 2024

3 doc #US51377124, August 2024

Conference Call Information

Smartsheet will host a conference call and live webcast for analysts and investors at 1:30 p.m. Pacific Time on September 5, 2024. A live webcast and accompanying presentation can be accessed through the events section of the Smartsheet investor relations 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 U.S.). The conference ID is 7672979. A replay of the conference call will be available starting approximately two hours after the conclusion of the live event and will be available for seven days. The dial-in for the replay is (800) 770-2030 or +1 (609) 800-9909 (outside of the U.S.).

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 third fiscal quarter ending October 31, 2024, the full fiscal year ending January 31, 2025, 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 July 31, 2024 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 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, as applicable. We define non-GAAP net income as GAAP net income (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.

We define basic non-GAAP net income per share as non-GAAP net income 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. There are a number of limitations related to the use of these non-GAAP measures as compared to GAAP operating loss and net income (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) and principal payments on finance lease obligations. 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, share repurchases, and potential acquisitions. Free cash flow is useful to investors as a liquidity measure because it measures our ability to generate excess cash beyond what is required for our operations. 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.

Definitions of Key Business Metrics

Annualized recurring revenue

We define annualized recurring revenue, or ARR, as the annualized recurring value of all active subscription contracts at the end of a reporting period. We exclude the value of non-recurring revenue streams, such as our professional services revenue, that are recognized at a point in time. We use ARR as one of our operating measures to assess the strength of the Company’s subscription services. ARR is a performance metric and should be viewed independently of revenue and deferred revenue, and is not intended to be a substitute for, or combined with, any of these items. Both multi-year contracts and contracts with terms less than one year are annualized by dividing the total committed contract value by the number of months in the subscription term and then multiplying by 12. Annualizing contracts with terms less than one year results in amounts being included in our ARR calculation that are in excess of the total contract value for those contracts at the end of the reporting period. The value of subscription contracts that are sold through third-party resellers, wherein we do not have visibility into the pricing provided, is based on the list price.

Average ARR per domain-based customer

We use average ARR per domain-based customer to measure customer commitment to our platform and sales force productivity. We define average ARR per domain-based customer as total outstanding ARR 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 ARR from the cohort of all customers as of the 12 months prior to such period end (“Prior Period ARR”). We then calculate the ARR from these same customers as of the current period end (“Current Period ARR”). Current Period ARR 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 ARR by the total Prior Period ARR to arrive at the dollar-based net retention rate. Any ARR 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.

The dollar-based net retention rate is used by us to evaluate the long-term value of our customer relationships and is driven by our ability to retain and expand the subscription revenue generated from our existing customers.

About Smartsheet

Smartsheet (NYSE: SMAR) is the modern enterprise work management platform trusted by millions of people at companies across the globe, including 85% of the 2023 Fortune 500 companies. The category pioneer and market leader, Smartsheet delivers powerful solutions fueling performance and driving the next wave of innovation. 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 July 31,

 

Six Months Ended July 31,

 

2024

 

2023

 

2024

 

2023

Revenue

 

 

 

 

 

 

 

Subscription

$

263,530

 

 

$

221,522

 

 

$

512,625

 

 

$

427,523

 

Professional services

 

12,882

 

 

 

14,063

 

 

 

26,771

 

 

 

27,948

 

Total revenue

 

276,412

 

 

 

235,585

 

 

 

539,396

 

 

 

455,471

 

Cost of revenue

 

 

 

 

 

 

 

Subscription

 

37,999

 

 

 

33,584

 

 

 

73,771

 

 

 

66,751

 

Professional services

 

11,852

 

 

 

13,454

 

 

 

24,402

 

 

 

26,168

 

Total cost of revenue

 

49,851

 

 

 

47,038

 

 

 

98,173

 

 

 

92,919

 

Gross profit

 

226,561

 

 

 

188,547

 

 

 

441,223

 

 

 

362,552

 

Operating expenses

 

 

 

 

 

 

 

Research and development

 

63,600

 

 

 

58,358

 

 

 

126,037

 

 

 

114,548

 

Sales and marketing

 

130,222

 

 

 

129,813

 

 

 

255,461

 

 

 

244,765

 

General and administrative

 

41,219

 

 

 

36,523

 

 

 

79,334

 

 

 

71,501

 

Total operating expenses

 

235,041

 

 

 

224,694

 

 

 

460,832

 

 

 

430,814

 

Loss from operations

 

(8,480

)

 

 

(36,147

)

 

 

(19,609

)

 

 

(68,262

)

Interest income

 

8,836

 

 

 

5,847

 

 

 

16,662

 

 

 

11,064

 

Other income (expense), net

 

(263

)

 

 

(55

)

 

 

(640

)

 

 

(591

)

Income (loss) before income tax provision (benefit)

 

93

 

 

 

(30,355

)

 

 

(3,587

)

 

 

(57,789

)

Income tax provision (benefit)

 

(7,765

)

 

 

3,002

 

 

 

(2,587

)

 

 

5,438

 

Net income (loss)

$

7,858

 

 

$

(33,357

)

 

$

(1,000

)

 

$

(63,227

)

Net income (loss) per share, basic

$

0.06

 

 

$

(0.25

)

 

$

(0.01

)

 

$

(0.47

)

Net income (loss) per share, diluted

$

0.06

 

 

$

(0.25

)

 

$

(0.01

)

 

$

(0.47

)

Weighted-average shares outstanding used to compute net income (loss) per share, basic

 

138,408

 

 

 

133,829

 

 

 

137,923

 

 

 

133,196

 

Weighted-average shares outstanding used to compute net income (loss) per share, diluted

 

141,157

 

 

 

133,829

 

 

 

137,923

 

 

 

133,196

 

Share-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands, unaudited):

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

2024

 

2023

 

2024

 

2023

Cost of subscription revenue

$

3,020

 

 

$

3,357

 

 

$

6,072

 

 

$

6,816

 

Cost of professional services revenue

 

1,511

 

 

1,915

 

 

3,249

 

 

3,825

Research and development

 

18,217

 

 

 

17,611

 

 

 

36,273

 

 

 

35,043

 

Sales and marketing

 

14,424

 

 

 

18,989

 

 

 

31,019

 

 

 

38,043

 

General and administrative

 

10,197

 

 

 

10,151

 

 

 

20,676

 

 

 

20,075

 

Total share-based compensation expense

$

47,369

 

 

$

52,023

 

 

$

97,289

 

 

$

103,802

 

SMARTSHEET INC.

Condensed Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)

 

 

July 31, 2024

 

January 31, 2024

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

393,487

 

 

$

282,094

 

Short-term investments

 

313,082

 

 

 

346,701

 

Accounts receivable, net of allowances of $4,151 and $6,560, respectively

 

193,076

 

 

 

238,708

 

Prepaid expenses and other current assets

 

63,990

 

 

 

64,366

 

Total current assets

 

963,635

 

 

 

931,869

 

Restricted cash

 

18

 

 

 

19

 

Deferred commissions

 

155,696

 

 

 

148,867

 

Property and equipment, net

 

41,153

 

 

 

42,362

 

Operating lease right-of-use assets

 

32,102

 

 

 

39,480

 

Intangible assets, net

 

22,943

 

 

 

27,960

 

Goodwill

 

141,477

 

 

 

141,477

 

Other long-term assets

 

5,817

 

 

 

5,445

 

Total assets

$

1,362,841

 

 

$

1,337,479

 

Liabilities and shareholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

6,076

 

 

$

2,937

 

Accrued compensation and related benefits

 

61,496

 

 

 

77,453

 

Other accrued liabilities

 

30,743

 

 

 

30,534

 

Operating lease liabilities, current

 

15,981

 

 

 

16,040

 

Finance lease liabilities, current

 

280

 

 

 

216

 

Deferred revenue

 

547,995

 

 

 

568,670

 

Total current liabilities

 

662,571

 

 

 

695,850

 

Operating lease liabilities, non-current

 

26,643

 

 

 

33,100

 

Finance lease liabilities, non-current

 

339

 

 

 

455

 

Deferred revenue, non-current

 

1,859

 

 

 

1,785

 

Other long-term liabilities

 

538

 

 

 

434

 

Total liabilities

 

691,950

 

 

 

731,624

 

Shareholders’ equity:

 

 

 

Preferred stock, no par value; 10,000,000 shares authorized, no shares issued or outstanding as of July 31, 2024 and January 31, 2024

 

—

 

 

 

—

 

Class A common stock, no par value; 500,000,000 shares authorized, 138,533,780 shares issued and outstanding as of July 31, 2024; 500,000,000 shares authorized, 136,884,011 shares issued and outstanding as of January 31, 2024

 

—

 

 

 

—

 

Class B common stock, no par value; 500,000,000 shares authorized, no shares issued and outstanding as of July 31, 2024 and January 31, 2024

 

—

 

 

 

—

 

Additional paid-in capital

 

1,575,180

 

 

 

1,468,805

 

Accumulated other comprehensive income (loss)

 

(148

)

 

 

(146

)

Accumulated deficit

 

(904,141

)

 

 

(862,804

)

Total shareholders’ equity

 

670,891

 

 

 

605,855

 

Total liabilities and shareholders’ equity

$

1,362,841

 

 

$

1,337,479

 

SMARTSHEET INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Six Months Ended July 31,

 

2024

 

2023

Cash flows from operating activities

 

 

 

Net income (loss)

$

(1,000

)

 

$

(63,227

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Share-based compensation expense

 

97,289

 

 

 

103,802

 

Depreciation and amortization

 

13,625

 

 

 

13,191

 

Net amortization of premiums (discounts) on investments

 

(4,813

)

 

 

(4,845

)

Amortization of deferred commission costs

 

32,564

 

 

 

24,378

 

Unrealized foreign currency (gain) loss

 

(492

)

 

 

483

 

Non-cash operating lease costs

 

5,087

 

 

 

6,322

 

Impairment of long-lived assets

 

3,237

 

 

 

—

 

Other, net

 

3,985

 

 

 

1,674

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

41,942

 

 

 

40,433

 

Prepaid expenses and other current assets

 

254

 

 

 

49

 

Other long-term assets

 

(761

)

 

 

(798

)

Accounts payable

 

3,116

 

 

 

(602

)

Other accrued liabilities

 

(3,291

)

 

 

8,000

 

Accrued compensation and related benefits

 

(14,784

)

 

 

(2,337

)

Deferred commissions

 

(39,393

)

 

 

(38,840

)

Deferred revenue

 

(20,385

)

 

 

3,183

 

Other long-term liabilities

 

104

 

 

 

216

 

Operating lease liabilities

 

(7,062

)

 

 

(8,052

)

Net cash provided by operating activities

 

109,222

 

 

 

83,030

 

Cash flows from investing activities

 

 

 

Purchases of short-term investments

 

(177,092

)

 

 

(248,480

)

Maturities of short-term investments

 

218,259

 

 

 

174,900

 

Purchases of property and equipment

 

(1,023

)

 

 

(1,395

)

Proceeds from sale of property and equipment

 

34

 

 

 

27

 

Capitalized internal-use software development costs

 

(5,317

)

 

 

(4,815

)

Net cash provided by (used in) investing activities

 

34,861

 

 

 

(79,763

)

Cash flows from financing activities

 

 

 

Proceeds from exercise of stock options

 

9,930

 

 

 

1,070

 

Taxes paid related to net share settlement of restricted stock units

 

(13,925

)

 

 

(1,150

)

Proceeds from contributions to Employee Stock Purchase Plan

 

10,774

 

 

 

10,846

 

Principal payments of finance leases

 

(52

)

 

 

—

 

Repurchases of Class A Common Stock and related costs

 

(39,588

)

 

 

—

 

Net cash provided by (used in) financing activities

 

(32,861

)

 

 

10,766

 

Effects of changes in foreign currency exchange rates on cash, cash equivalents, and restricted cash

 

(23

)

 

 

6

 

 

 

 

 

Net increase in cash, cash equivalents, and restricted cash

 

111,199

 

 

 

14,039

 

Cash, cash equivalents, and restricted cash at beginning of period

 

282,442

 

 

 

223,757

 

Cash, cash equivalents, and restricted cash at end of period

$

393,641

 

 

$

237,796

 

Supplemental disclosures

 

 

 

Cash paid for interest

$

15

 

 

$

—

 

Cash paid for income tax

 

3,917

 

 

6,186

 

Accrued purchases of property and equipment, including internal-use software

 

819

 

 

 

1,255

 

Share-based compensation expense capitalized in internal-use software development costs

 

1,807

 

 

 

2,065

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

541

 

 

 

—

 

Right-of-use asset reductions related to operating leases

 

2,832

 

 

 

1,033

 

Repurchases of Class A Common Stock and related costs in accrued expenses

 

749

 

 

 

—

 

Short-term investment securities purchased but not settled

 

2,740

 

 

 

—

 

SMARTSHEET INC.

Reconciliation from GAAP to Non-GAAP Financial Measures

(unaudited)

 

Reconciliation from GAAP operating loss to non-GAAP operating income and operating margin

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

(dollars in thousands)

Loss from operations

$

(8,480

)

 

$

(36,147

)

 

$

(19,609

)

 

$

(68,262

)

Add:

 

 

 

 

 

 

 

Share-based compensation expense(1)

 

48,194

 

 

 

52,549

 

 

 

98,669

 

 

 

104,749

 

Amortization of acquisition-related intangible assets(2)

 

2,305

 

 

 

2,707

 

 

 

5,012

 

 

 

5,416

 

Lease restructuring costs(3)

 

3,279

 

 

 

110

 

 

 

3,319

 

 

 

116

 

Non-GAAP operating income

$

45,298

 

 

$

19,219

 

 

$

87,391

 

 

$

42,019

 

 

 

 

 

 

 

 

 

Operating margin

 

(3

)%

 

 

(15

)%

 

 

(4

)%

 

 

(15

)%

Non-GAAP operating margin

 

16

%

 

 

8

%

 

 

16

%

 

 

9

%

(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 income (loss) to non-GAAP net income and per share data

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

(in thousands, except per share data)

Net income (loss)

$

7,858

 

 

$

(33,357

)

 

$

(1,000

)

 

$

(63,227

)

Add:

 

 

 

 

 

 

 

Share-based compensation expense(1)

 

48,194

 

 

52,549

 

 

 

98,669

 

 

 

104,749

 

Amortization of acquisition-related intangible assets(2)

 

2,305

 

 

 

2,707

 

 

 

5,012

 

 

 

5,416

 

Lease restructuring costs(3)

 

3,279

 

 

 

110

 

 

 

3,319

 

 

 

116

 

Non-GAAP net income

$

61,636

 

 

$

22,009

 

 

$

106,000

 

 

$

47,054

 

 

 

 

 

 

 

 

 

Non-GAAP net income per share, basic

$

0.45

 

 

$

0.16

 

 

$

0.77

 

 

$

0.35

 

Non-GAAP net income per share, diluted

$

0.44

 

 

$

0.16

 

 

$

0.75

 

 

$

0.34

 

(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.

SMARTSHEET INC.

Reconciliation from GAAP to Non-GAAP Financial Measures

(unaudited)

 

Non-GAAP reconciliation from basic to diluted weighted-average shares outstanding

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

(in thousands)

Weighted-average shares outstanding; basic

138,408

 

133,829

 

137,923

 

133,196

Effect of dilutive securities:

 

 

 

 

 

 

 

Shares subject to outstanding common stock awards

2,749

 

 

3,541

 

 

2,715

 

 

3,864

 

Weighted-average common shares outstanding; diluted

141,157

 

 

137,370

 

 

140,638

 

 

137,060

 

Reconciliation from net operating cash flow to free cash flow

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

2024

 

2023

 

 

2024

 

2023

 

 

 

 

 

 

 

 

 

(in thousands)

Net cash provided by operating activities

$

59,144

 

 

$

48,459

 

 

$

109,222

 

 

$

83,030

 

Less:

 

 

 

 

 

 

 

Purchases of property and equipment

 

(410

)

 

 

(542

)

 

 

(1,023

)

 

 

(1,395

)

Capitalized internal-use software development costs

 

(1,566

)

 

 

(2,418

)

 

 

(5,317

)

 

 

(4,815

)

Principal payments of finance leases

 

(18

)

 

—

 

 

 

(52

)

 

 

—

 

Free cash flow

$

57,150

 

 

$

45,499

 

 

$

102,830

 

 

$

76,820

 

SMARTSHEET INC.

Reconciliation from GAAP to Non-GAAP Financial Measures

(unaudited)

 

Reconciliation from GAAP operating loss to non-GAAP operating income guidance

 

 

Q3 FY 2025

 

FY 2025

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

 

(in millions)

Loss from operations

$

(9.9

)

 

$

(7.9

)

 

$

(41.8

)

 

$

(36.8

)

Add:

 

 

 

 

 

 

 

Share-based compensation expense(1)

 

49.5

 

 

 

49.5

 

 

 

205.0

 

 

 

205.0

 

Amortization of acquisition-related intangible assets(2)

 

2.3

 

 

 

2.3

 

 

 

9.6

 

 

 

9.6

 

Lease restructuring costs(3)

 

0.1

 

 

 

0.1

 

 

 

4.2

 

 

 

4.2

 

Non-GAAP operating income

$

42.0

 

 

$

44.0

 

 

$

177.0

 

 

$

182.0

(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

 

 

Q3 FY 2025

 

FY 2025

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

 

(in millions)

Net loss

$

(10.1

)

 

$

(8.1

)

 

$

(26.8

)

 

$

(21.8

)

Add:

 

 

 

 

 

 

 

Share-based compensation expense(1)

 

49.5

 

 

 

49.5

 

 

 

205.0

 

 

 

205.0

 

Amortization of acquisition-related intangible assets(2)

 

2.3

 

 

 

2.3

 

 

 

9.6

 

 

 

9.6

 

Lease restructuring costs(3)

 

0.1

 

 

 

0.1

 

 

 

4.2

 

 

 

4.2

 

Non-GAAP net income

$

41.8

 

 

$

43.8

 

 

$

192.0

 

 

$

197.0

 

(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/20240905914523/en/

Smartsheet Inc. Investor Relations Contact Aaron Turner investorrelations@smartsheet.com

Media Contact Jennifer Henderson pr@smartsheet.com