SMAR - Earnings call transcript Q2 2020

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Operator

Good afternoon. My name is Chris and I will be your conference operator today. At this time, I would like to welcome everyone to the Smartsheet second quarter fiscal 2020 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator

turn to now of Turner, conference Relations. Investor the will Aaron over Head I

Aaron Turner

Good welcome afternoon second Chris. you Thank and fiscal XXXX quarter everyone year earnings call. of Smartsheet's to

our discussing results market be today. today our Mark me Smartsheet's With issued CFO, will We Jennifer closed announced in Ceran. after press the the CEO, Mader, are release

be Q&A. the Chief Officer, Our during Product Gene available Farrell, will also

There Relations in is can be is slide available will for website being at Investor our on be section call accompanies investors.smartsheet.com. Today's that our also Investor a which presentation website. Jennifer's the webcast replay remarks, Relations of and prepared Events viewed

During federal forward-looking make securities of laws. this we the meaning will statements within call, the

projections are our events www.sec.gov. forward-looking available but about trends. Investor These have factors, to and those subject at financial described future in SEC the SEC on We statements forward-looking and based and statements these number limited website to, including, largely Relations other on filings of a not website risks and our expectations our on current

information Although in law. new statements actual update are by reflected future any events, these our as on call reasonable, materially during a to the may available to as of of made result we that or us and do we information not differ statements required are adversely. results the and based forward-looking this today obligation All believe forward-looking expectations assume statements except as

website. this GAAP can financials, in GAAP to be available U.S. call, will measure the reconciliation U.S. accompanies the Investor on financial our also presentation to addition comparable A that which the Relations found certain directly In we discuss non-GAAP most measures. is

call Mark. turn over With that, me the let to

Mark Mader

of afternoon existing for growth. delivered in high-value for and and presence new providing everyone call. strategy solutions customers by quarter joining good international and We us executing enterprises, for Smartsheet's you our Aaron. expanding Thanks another strong today's thank driving

sizes all businesses address challenges achievement and to and enable significant teams designed drive of to enterprise individual accelerate platform innovation. move Our and faster,

of The XX% or domain-based over all total posted million We collaborators $X,XXX. of and now annualized value X.X $XX.X customer paid revenue our per year-over-year million. and representing year-over-year across grew to is XX% number of average growth users Smartsheet contract in QX, ACV

customers U-Haul, within the and companies world's or more by $XXX,XXX. some serving such of a recurring $XX,XXX ARR quarter during expansions our ARR Expansion their global rental firm optics, their and Notable brands. base annual XX more customers equipment increasing included Corporation, marketing company occurred by increasing revenue the at and XX as than and largest the leader VCCP, Olympus in global storage and electronics a moving creative than

management, tracking intended automation to customers in project XXX was research with those in that diseases their customers expansions quarter, From were conversations healthcare Smartsheet high one products our how record or QX and accelerator with Smartsheet's of trials restaurants for critical hundreds I repeatedly driven the driving and offerings. more is of heard clinical remodeling In to such July areas and media. Many of businesses. reminded seeing of managing value and consistency reopening unique workflow capability-based bookings record by bought globally, I development, eradicate as mission in this role global

and the of about stages experiments, leaders. allowing to mobile devices information the increased at than With the XX information For wanted now field more real-time and research biotech images across to and reporting organization. safety decision-making Syngenta, connect issues and corporate reporting and in agricultural countries research teams decisions field facilities their company to accurate share product example, Swiss-based for workers Smartsheet, more rapid testing use frequent of to next a manufacturing of tablets and transparency labs, farms ensure and from quickly, observed

Washington Southern healthcare requirements. Smartsheet a Group, managers' caregivers from care medical and intake any document patient clinic Smartsheet access attestations mandated leverages of any input information cross-platform throughout XX Oregon enables evolving with track location. Medical practices compliance device in Providence constantly to organization accessibility and clinic with to clinics and

publishing XX sought both And build automated Crain Communications, publications. and time-to-market dynamic execution and and able work third-party By and reduce multi-industry a that to products, center Ad control work internal implement business a including stakeholders scalable, Autoweek across platform vendors. duplicative increase brands provisioning regional visibility our for workflows centralized implementing conglomerate, Crain view and is Smartsheet Age, its to and

and these and is wins Fueling of a team achievement pipeline Smartsheet organizational innovation. strong product

to challenges delivering and move required support are the platform achieve that a on anyone and significant We use that more. investments platform infrastructure can to making focused meet faster,

Smartsheet the example, and maintain or data users time time-based helps scenarios enable This in approvals the multiple to to workflows a with to stakeholders actions enhancements schedule. ability By workflow. single and For to automate save consistency. work latest recurring multiple sophisticated a processes, automate our workflow automate users organizations includes a more automated to using create enabling

Gov announced In mid-August, we had Smartsheet full FedRAMP authorization. received that

better the seek Now Smartsheet and workflows that the the collaboration in processes, the drive of and among to for to of and authorized we modernize are expand interagency employees chance pace marketplace, federal effectiveness to forward to we look experiences intra use and FedRAMP as citizens. deliver they

last look With at customer October many to set X. and better of we is forward product forward conference, seeing offerings there. third you annual even of track total to global unveiling on and We September bigger ENGAGE X,XXX, registrations XX year's outpace to look to ENGAGE'XX through be our additional

advertising we ad Wall The full-page it I I this a print our off that few to with a morning the edition Before Journal. share of in over turn want Street Jenny, kicked national to on thoughts campaign

look you on broadly. the achievement I and all that will to ads to world for months forward across many and the we telling heavily in note of channels, that individuals all As us different see coming more It's both you for has companies time message the sizes. hears focused of that are that Smartsheet offer a about story

your customers' far am pleased thus which you to of businesses. an Thank XXXX performance I in of remain for support, team degree and our To business. and in our confidence customers and customers, fiscal Thanks another. of one service your future also important to year in and our shareholders to of our Smartsheet our our with for mindful are ever the partners the the part of we close,

Jenny?

Jennifer Ceran

and Mark you welcome Thank everyone.

up $XX.X As year second in came at a quarter our up mentioned, Mark Billings versus revenue million, at $XX.X ago. came year in versus XX% ago. a million, XX%

retention ACV net domain-based dollar-based our and rate year-over-year. grew XX% XXX% per Our customer was average

quarter domain-based customers. to third little We also added over a logos, of we the end obtained with new XX,XXX the X,XXX a approximately via over which XX,XXXft net acquisition

$X.XX. from cash $XX.X non-GAAP investments to flow capabilities quarter and negative was as loss continued free which of share million Operating million short-term go-to-market million $X.X platform loss includes Second and we per flow net $XXX in was $XXX make and operating equity in ended quarter June. negative million $X.X investments and cash was million was our non-GAAP we raise cash and with our the

Services services $X.X versus dive revenue in $XX.X a of services a component. XX% ago. accelerators, consulting ago in for a was revenue year and and me represented into year total of rate in attach lower large a million, growth engagement versus our of Of by the ongoing which revenue, the the million with total QX quarter. increase up Let came The year a more revenue XX% at by lapping of $XX.X revenue subscription million, revenue. sales was tempered last XX% our

on move me to Let metrics.

more or of and us in to year. $XX,XXX year. XXX% by continue ACV. per our XX% total customers XXX We X,XXX pay XX% strong pay segments or per XX%, growth or more approximately pay customer respectively now And and represent customers, now year. grew and now more XXX% see larger XXX us now $XXX,XXX These $X,XXX us XX%, year-over-year per

earlier, prior customer increased quarter domain-based $X,XXX our ago. and retention the consistent average quarter and same points a our with percentage above was mentioned As net three for ACV to quarter the the year rate XXX%, dollar-based per

GAAP a Next, and provide all a on the basis to highlights I was with of Subscription was earnings balance results was reconciled and call. presentation second flat In before year the our release the our margin results quarter. sheet. are prior on and from to few and XX%. that our non-GAAP rest otherwise quarter, will the expenses margin gross Unless ago statement in are gross XX%, income our the stated, operating posted references color overall and

XX%. infrastructure margin in make Professional migrate quarter. our XXX margin of was overall target line services the our to incremental of prior public come to cloud, and to gross investments with margin we was XX%, in services more towards overall As our expect our long-term down which we

as revenue, or quarter, and points points Research begin quarter capitalization internal percentage operating XX% of percentage from point as a below was the decrease Turning of saw total two below from ago use and representing scale year $X.X quarter development cost XX% and million, realized quarter and prior second in to percentage some revenue, the two increased software. show and to one year million, $XX.X prior of three total the points we quarter were of ago the expenses. General scale. administrative we the

product added team new this developers the to continue We record quarter. to capabilities invest in and our a of number

of year marketing and expense in XX% revenue of the and was versus prior quarter the million or $XX.X sales quarter. XX% XX% Finally, ago in revenue

launch our expansion of sales our third revenue back we ENGAGE global our to as increase percentage in plan. of this campaign support October, in as total more add a brand expect and reps advertising half a and We hold the conference annual marketing year to

XX% flow. related loss capitalized with negative was headcount of use million and XX%. principal employees. Approximately Free operating $X.X flow Operating cash expenses loss X,XXX representing negative of and margin includes we on ended totaling Turning spend, software payments million, revenue. X% $XX.X CapEx which cash our total the of to quarter a leases were internal free over and operating was

turning to billings. Now

billings annual X% X% Our subscription multiyear XX% Approximately up and our $XX.X billings about billings of represented a the ago. total. were Quarterly were second monthly. XX% of quarter year versus million, with

for I third will the provide guidance our quarter fiscal year full and year now XXXX. the

expect $XX $XX For year-over-year quarter, total of million, to representing XX% million growth the to of revenue we third XX%.

between share average on of and $XX net million. be to and between loss million We non-GAAP to come $X.XX loss expect non-GAAP weighted per based XXX.X $X.XX in operating outstanding million and $XX shares

conference, reflect in expect plans. QX brand market ENGAGE to negative We cash up million. and related operating $X to advertising loss expansion free our our flow flow and to be Both our free cash expenses also

the to million, to fiscal For XX%. representing XX% expect $XXX of year, of be to full growth revenue range in total the million $XXX we

be and between non-GAAP outstanding. to the million weighted expect per $X.XX for $X.XX loss shares share average XXX.X year between and and loss approximately $XX million based We on $XX operating million net of non-GAAP

please the growth versus quarterly assume historical full fiscal to the be for $XXX expect in representing quarter. last of We purposes, to XX% for range year. remaining year, And the million XX% million for to for trends billings modeling billings $XXX of

Regarding in cash to into $X of Smartsheet's by year international $XX U.K. has the flow, million the cloud. given our flow our as invest the negative public our year. to free increasing negative to accelerate expanding are such our for free expansion Accordingly, faster migration and cash a success presence new guidance million we confidence full markets total the us

questions. With back turn it operator will to we now that, your the to take

Operator

first And [Operator Bhavan your Suri is Instructions]. William with question Blair. from

Your is line open.

Bhavan Suri

touch, Thanks question was for job wanted I rate to just that first our taking here. for maybe guys. Mark guess Hi retention nice and my I amazing.

adopt you these by some solutions, with to Smartsheet users are customers I these? time? guess us understand solutions is a are contributing been advanced at then accelerators quick have look I got for follow-up. You the results. customers nicely that's customers capability-based And land these And or have then adopted something new how to seeing more help they those decide that and

Mark Mader

Bhavan. Hi

the to business. think are nice in helping deploy understand solve accelerators people something matters to within serving I Smartsheet really that role a how their

have, that So which a and accelerator these to outcome, way more we they configuration want And take do M&A see a say, joint seven to to turnkey we see, we platform that can where issues can something rather you look they at challenge accelerator when we to we than choosing requires accelerators across which choose or common it's a business. the an great an are onboard. want selling achieve is

the look deploy sold that as said very with it's influencing to served get choose and or non-accelerator-based on and a I both. approach, Now business, well have on we grounding calls, go When whether into we side. us has people to have prior expansion at new whether they education that accelerators accelerator

reps see Given reps are new overweighted feeling that many signal the we to clearly expansion, advantage because the those. business quota-carrying where distribution reps starting presenting has to being group of our are we an comfortable there, sales but more have in

Bhavan Suri

you the the helpful. love of quarter the currency modeled then you of if and we to for seen could Jenny, in business I of was into some Great. quantify and have That's what sort any And currency given understand mix given really you. you big guidance if Thank what pretty numbers that quick sort might follow-up moves globally, a this have would Jenny. impact saw globally?

Jennifer Ceran

Hi Bhavan. Yes.

what there have that's roughly we $XXX,XXX the number. companies. some billings been we our billings So non-U.S. if currency is for of subscription small did our us current basically because a move, into rate We And of and in at because relatively still headwind other see X% on big roughly spot billings are impact however invoiced the a QX compared at our relatively goes dollars. look you to bill in

and of how allocate based an on revenue year historical it revenue rate. because the the we On was throughout just impact it's minimal side,

notice things we wasn't there. wasn't see the there that basis net headwind bit anything, dollar did One creating it impact math the rate, a retention on headwind a significant did of of based fact and on the but is little though several points a a we it

Bhavan Suri

you Thank guys. for Thanks questions. taking my Helpful. it. job. Got Nice

Operator

DiFucci Your Jefferies. with comes from next John question

line open. is Your

John DiFucci

technology you. follow-up questions. both these questions, issues I I am guess telephone issues, was I Thank on sorry. the hit didn't so you on some the hopefully having these business. international first there, Bhavan's

either last know, but as how from international, off XX come as the you you that data Can Jenny, in doing, your a or quarter, international you salespeople I far other I said cut would great the times, think presence you and us, get had have I too? that's given on even, there give don't of couple any did U.K. revenue that's if

Jennifer Ceran

nearly we has planning the more Well, the for XX of exceeded quota-carrying are folks XX because the team now Right. are them reps. the so U.K. half first expectations. we half U.K. the to terms targets, and and year in of started year we year those in in the internal And have of this invest our U.K. with

their business. So in that we to-date feel investing good and about really more performance

John DiFucci

Okay. Great.

to U.K. you And business prior of you had quarter? international anything realizing business say about even kind you information the how people did much came contribution Okay. give did But putting this about what that in internationally

Jennifer Ceran

our quarter was revenue this of from So XX% international.

John DiFucci

This talk interesting, if the like the and really sounds this on right. even spurring to maybe, And [ph]. just guess I And Great. Okay. it's accelerators actually it Gene, accelerators bought] you business can Mark. or sounds if [have been

now, some Should sure the we should maybe are other about continue if might I at is to pre-announce continue accelerators talk So seven think am and want about other Mark not are anything, but come? can any said. you be talk we to that on there see, areas them see that interesting? you you areas I

Gene Farrell

have Thanks stated, today. John. hi we Well, seven you Yes, Yes. for as question. the

can shoot away make the me the We to announcements team would where at think new end about would to for we I more business the meaningful more that we solutions have ENGAGE customers their you look tell areas bring continue and to talk we to that continue at month. we planning signal the customer's we conference of I But conference. where if I at upcoming based my to will and that solve likely on think after are out-of-the-box develop ENGAGE see the problems accelerators gave we

John DiFucci

now to It's can been it. see great And Okay. have of and a company actually nice continue that a We over you the year. a look to momentum kind wait same here. for month at just forward out job

So thanks.

Operator

from Stan with Your Morgan is next Stanley. Zlotsky question

open. is line Your

Stan Zlotsky

quarter. so question nice a for job much guys. again, the and taking in Thank you my Hi

into pro look, we quick of to in much And How services you sounds as end, growth the next a think So very and certainly financials amazing I into to your year? having half are follow-up. have what as half that how potentially and well. accelerators then about adoption, about like are that as of this you have my doing accelerators back does go thinking do from And go back year as accelerators your what it kind contribution could the year? we

Jennifer Ceran

Yes.

the XX% with Well, question in in is Okay. were would respect growth, services It's this to in Pro we XX% than Hi services guidance. change. QX. no it still of is continue important our QX. at is We And part that I was pro to year us. priced second a Stan, differently There really Jenny. with ago. just of guided X% your terms to

first the a total around accelerators subscription and products their seeing revenue. to contribution, respect capability-based with as of Then we question are percentage increase our

we quarter this that was in it So expect could continue. as And trend would new this XX%. we last it quarter see X%, that solution I create area, was

Stan Zlotsky

a was Got XX,XXXft? the in it. Thank quick from the follow-up. you. inorganic And of quarter just the acquisition What contribution

Jennifer Ceran

Yes.

revenue $X it's But are remind out not met year, would generate they we of said performing so billings we you to last for So and quarters expect the that full well what that not in we million kind expectations tell three XX,XXXft $X can are our material XX,XXXft really over to And breaking million results. as the I and overall of they the quarter for I of you quarter. is,

Stan Zlotsky

Okay. you Perfect. so much. Thank

Operator

Your with next from Davis is Richard Canaccord. question

open. is line Your

Richard Davis

I multiple some space, the foothills evolution of Hi. of am inside I student using kind you guys where may the have had and any we this trying of you wondering, just other bounced swim have vendors far seen and companies know, they like and Mark, your those a you in have right Venn an just and as things of in are you lanes before are that. stuff am I away but know years how Thanks. just still markets kind issue? Or Excel about this is evolving like beyond in And these at to of really vendors Thanks. there's think thinking as in different am is diagrams. market companies because out? about I evidence that's

Mark Mader

Hi large-scale interesting last mega-cap company What had conversations he a Richard. from, his I category go I help mission week on providers three. was really am before and from one down with to a hearing CEO XX in to

the of being try or efficiencies bit but and little out a choiceful. more the bounce to XX, charter XX by get wasn't So jettison to

did they I people's did energy are think is do had lot learn apps me the that surprise customers our I over apps. one So that intent to of what of really them. that say, for me. X,XXX would And deployed, to That's that had largest a ones behind surprise working best put

think not I that's for flight the of in to in terms a works what seeing of today. everything sort single we are find category, every that

not think back to sprawl. I So category desires within now swing I preferences decisions think the very do over think is But I and companies. being a the buy to again, to business have are between into large people's is balance and user going healthy decisions. pendulum time, these each needs that a having is But renewal incorporated intent right There and provider and don't IT. for units single

Richard Davis

much. Got very it. Thank you

Operator

next is Terry from question Your Tillman with SunTrust.

Your is line open.

Terry Tillman

ramping Hi to, sounds and But half, cold we even than guess I Mark, just marketing sorry Aaron. expected. in are it relates maybe and am like sales I question first for here. a horrible the more second investments Jenny the

am ROI to customers per whether benefits just which could then how some new points other advertising. I we customers. see CMO. new what areas of But have next where that's year are it's or when talking investment? net when think see you know do part And we, or is would some of the you maybe investors, the pinpoint are you incremental there year I proof $XXX,XXX a it assuming you I is of like

around bit And we the metrics follow-up. then I Just more that? a and investments watch little how had a about the

Mark Mader

that Great. Jenny Thanks of Jerry. take the will take and I the will half first then second.

were how together clarity now What we that our are come ready terms our in that. dollars like to to when in that composite want we see year. customer be campaign investments whole Asia-Pac gelling. quota-carrying incremental, is organizationally brought deploying we Anna how and In and that knew half investment going pleased feel to U.K. has reps, to we of around group the we our the do have team the this our second been success, team, we We forward support, are into pull

really year, into we that in Heading XXXX. the anticipated hitting not FY

are did a approached one we of things think about how I phased in we would to we more the that approach manner. slightly than I say that's So in different going the what U.K., U.K. the

to assertive are built quota-carrying the are that that we few we like have composite. First, leader, a more looks going quite of what over have getting some said in months then confidence We that be and course now a reps sales to and we going we place in group quickly. structure in

Jenny?

Jennifer Ceran

saw and to there. respect half, of of marketing was by heavily up kind between our if happened marketing what sales kind QX, and in with dollars ENGAGE of jump And incremental and million last investment look at in and that back you a driven QX conference. Yes. the several It's you year sales

Now expansion on markets. of we into top that, international these saw

got We have advertising. brand

the So revenue percentage year ago. you and sales be marketing of QX a I increase pronounced than will into a as saw more think what in

investment, we there these still every cap, about number is monitor investments. we right now, to at And make and look incremental room And in like on to of it payback, still and terms quarter. to return really feel continue good magic we our LTV we feel

Terry Tillman

second view follow-up? to parts. technically a as one question I I And it's Okay. Can just two ask though that question event

Mark Mader

Yes. Sure Terry.

Terry Tillman

don't Right. if I a I question. asked why know I you could

Jenny, a billing. So you have anyways, perspective on

of lot in much all row, actually innovation. you have of are a But how part a done of couple education, et banking just curious like cetera unleash years coming and now Thank sales you a conference. a of of is, about this are am couple what great out know it of years ENGAGE as it? activity into new the activity? getting of networking, you baking is potential I in kind this had new of I What you. on terms sales also You

Jennifer Ceran

to definitely opportunity. a get There that's customers. lead generation with done. business engage We is it's Well,

estimates QX what Without much feel best too what our factor we return is do QX. so of we into that might a look like from good is, there and going it And for like detail ENGAGE. of

Operator

comes next question Oppenheimer. Kidron from Your with Ittai

open. is line Your

Ittai Kidron

quarter. couple a guys. I me. Hi guess Good for

another. I trying past over Mark, I over the top results your few seeing the your is and pattern range First, guess kind quarters can't a magnitude of to beat from It's that of am at look quarter the you the the happy of methodology help guidance could that shrinking. you by which changing shrinking the of the under what talk is assumption give what were with one you to maybe in And guidance Or does perhaps change, not business? not about the quarter? during

Mark Mader

Yes.

years, I say were XX them, think if all than the at sooner most of over morning, things wake I me would dimensions. get I want two up so we right, in you on the almost to course

So this will be a nice long answer for you.

loved have two our have did year. members had been folded has which The would community into to those in we way on of really the teams acquisitions integration day the strong. half have side those one. So in first the I product

ENGAGE the you in office of customer So on you the are acquisition, are fully showing we next our some front. that base the progress do excited And day the and the about come integrated. parts at

unified we dimensions. have is offering something market, want that But a to we across go those hand-in-glove where all as to

do work understand So entailed. believe details is matter. pushing are one And on very that we you only what's hard on really embark the that until we that and you

and to putting to quickly our jazz hands between around something your something customers we and that's that's out the shipping So business. ready, not run market not how telling buy difference

we model. apply learnings that's So additional thing at specific one acquisitions further which time to refine and our going we very those over as are look

given reports process. disappointed in these again companies that an have progress engage just ever through processes it that like FedRAMP to will And past a one agencies. the would loved be But the execute about length been we year. now of quarterly the those. opportunities, RFP I seems a had fastest is another That federal I with process one. right. multiple time earned We were probably on with right reports. have of the takes again, eternity in me. We have to to are to XX-day

two need the bake. are don't say simply opportunities very those which But to And to time unfortunately, would of variables fronts. So those I I some there. excited represent concrete that get control about I new both things am all

Ittai Kidron

scale then And about kind drift down long-term from some better far as a or for you a that time. to the you long you of need is some sort how you than there margin expect will follow, actually really to standpoint of gross because doing get be that Jenny, see talked have make steady? over it and target your holding standpoint are we quite Excellent. What a revenue to time you it

Jennifer Ceran

Yes.

accelerating were we think predominantly now I that more like thinking that relates months the we Originally, thinking as and six we cloud of it are are migration. to we call the that timing mentioned on our months. migration and to XX the

to down faster, extent subscription the gross tick that percentage. happens expect that to you So our margin should

Ittai Kidron

in am will already Just months? start confused. that to clarify that, are Or you bit in I six it process? you

Jennifer Ceran

are were taking we expenses and we a equipment. on versus we will we but have decided now to we process it that started already seeing slower start going the so and have much We more deprecation cloud-based accelerate have

So down a overlap there some bit. will which bring could be it

Ittai Kidron

it. Got

Okay. much. luck Thank Good guys. you very

Operator

Scott Berg is Needham. question from with Your next

open. Your line is

Scott Berg

here? from much now? Hi terms opportunity in everyone. quarter. like us general comes how to you business view right your Congrats what in guess. we federal expand the start, I really looks of on guess your opportunity good wanted on FedRAMP small. remind should opportunity this I is really, to My Can of longer-term Mark, a how But

Mark Mader

Yes.

the playbook companies sold there into what think for the I is I people formulaic from heard, have works that have is no over years who agencies Scott, that all equally.

an operate learner now. digits make a which process do We small full-on respects, is am, approach authorization to a Low, somewhat on this we of low, a say, I have, I process. and low world to experiential our this would decisions today. revenue on The tactical starting from degree in very RFP So many of people are than agency today. comes very, single different percentage temporary

We closure. that to have not process gone through yet

have So the magnitude real a understand are to know authorized sense that know agencies number opportunity. the them. as it's sell is to that, a do small we greater we needs. very for we is have What vendors of will who of we that What do

that evidence no until wins our like from. really seeing start we to posting successfully start utilizing there and I So draw dynamic. we product, agencies But is

Scott Berg

then I the additional And the or a discussed Helpful. year Are success. on change? you you that in about that maybe flow. for XXXX. I get flow still neutral it. your does investments Got cash How True cash this follow-up holding view quick the on believe fiscal have expectation? free year for roughly Jenny XXXX? given

Jennifer Ceran

point, are make looking significant pretty profitability that very to we and path to mindful Well, are growth your are to at related of investments the our same to that but may we time we want at opportunities those.

So off finishing to we still do. five are this got months have another We year.

kind couple when off now speak give will kicking in for guide we everyone of quarters. the of year update are as right planning I we We our a and process an next

Scott Berg

on a Congrats Got good Thanks again. quarter. it.

Operator

Your Murphy next question with Mark is from JPMorgan.

open. is line Your

Pinjalim Bora

for is This taking Thanks and guys. Mark. Pinjalim questions of on Hi congrats the on quarter. our behalf

and could among those along most you accelerators, question the lovely offerings, are Going about do uptick are that you average then third of capability-based How where the what back the is, you center doing? from realizing And control those with three? And today? those opportunity products that the is the two these view? to see part ASP talk of dynamic

Mark Mader

You packed in a lot there.

view probably the accelerator the healthy. that of the what building premium based those make kind growing you been is. bundle varies you are size And tell of we breakout that are solution dynamic most in our on I tell based would and uploader would of the for are to the across pretty for data I three fastest has don't So all premium products offerings, addition demand up of widely that's ASP portfolio the one us. it of the control while customer. for actually center, that uploader Data quite we

Pinjalim Bora

control may all those? that the center is be then oldest of it being the And say Okay. is to largest fair among

Mark Mader

represents been Control and that it around the revenue of has it's largest group. largest, Yes. the center

Pinjalim Bora

Understood.

the And steadily. pretty called there up out there? or Is retention churn see. improvement in gross That's to net to been great any obviously be has Okay. retention Jenny, dollar-based holding

Jennifer Ceran

Yes.

our So I but last to rounded X%. down that loss was X%, mentioned above rate quarter

but This still. to quarter X% it below it's X%, rounds up

the So we have total rate a in XX quarter. for point basis improvement loss

Pinjalim Bora

so you Thank much. Excellent.

Operator

Your Zukin next question RBC. is from with Alex

line is open. Your

Alex Zukin

this XXX%. What's guess taking of about the right at half balance? the solid this is question to expansion report. Hi on the range dollar-based guys. way for Or a great on it net for posting the I at Thanks just this the it up? congrats see think of that point? another metric, right Is year? right you kind first at and maybe back Do my ticking

Jennifer Ceran

Alex. It looks working with you Yes. Hi again. nice to be

retention On the of end net fiscal the rate, the year. are by we high-XXs modeling

very very happy But odd. So We bring percentages. we high-XXX aggressive number. are would and very be the with don't typically that up, it

Alex Zukin

for It that investing and Mark. Perfect. maybe got of growth you lot are ahead growth. ahead seems have of of a you opportunities you then like And

stack by where So and you are the feel APAC see lowest from federal? investing maybe still you like rank hanging you perspective? do you your enthusiasm maybe And that level under can U.K., where between fruit the or

Mark Mader

fruit would on when be remind Yes. picked. to low still ground, needs the One And our rotted. thing is I typically it's hanging to it's like fallen employees

there do of I pursue, now, are organizationally such of thing each things think the well? really, things that a we focused effort. things So really those pursue, these you takes right plethora And how do but you are the to on

be we some region. U.K., terms our going to what in learned applying we to the lessons next of are So

deploying The heroic be we the as together a did again, phase that. the team it's, will apply in And differently to going U.K. people next region. to effort out. people are We in and holding it we

terms learn around. of I apply things I time it think we effectively So next excitement, excited is, about get and in that more

I acquisitions. the that talked And I in of is new context that about federal context presence. talked territory about no of different, right. the in

sales authentic the as respond kicking that learn to well. respond will dedicated our inquiries to we to go professionals learn as to sort how So are of they to inquiries where just that to inquiries, from space tires, as who versus we deploying we are how best

build about, excited that differentiated. most of for am up is people the that we build software should bringing am We up I be are stuff I love ENGAGE. that We stuff we fired things at stuff. to market it, company. The core a am and are fired that I going to

Do else? maybe better? sound they different a talk are look you than the like you thing I someone someone So, of little one better Do your offering mean, about, it's to else? than

No.

things. possible with talk thing stuff that those If sales a to I that call. elsewhere, you about a very have love is in not people is concrete

So which a markets. as other is I roadmap, to getting into we improving just market that think not people It's that love certain stuff for there have. about don't need new brings our it's union. things,

one. So learn ENGAGE Hopefully that's can you some of you my number and come to it. about

Alex Zukin

Appreciate Thank you guys. it.

Operator

from Wedbush is Your Securities. Steve next with question Koenig

line open. Your is

Steve Koenig

Thanks Smartsheet. taking for Hi question. my

follow-up. So one quick one one and

at all, very Your impressive subscription decelerated revenue hardly results.

the care It's You really not of we revenue. driver mixed when get results. about pro-serve and does in did it comp pro-serve the people mention an But at strategic enabler. you had business. hard a don't headline look It's

pace? So that decelerate enable people model should how of as looking out a I to kind at you on revenue that the you What important or all? about you? just pro-serve? future at Are in greater for curious to It's not think am does

Jennifer Ceran

Yes.

continue are a to we to rather, of So be XX%. the business. my our that And X% to is part expectation revenue will guiding expectation, or important services very our year

won't necessarily it more. So decelerate

total consistent to our I think if are with be revenue, XX% looking with somewhere will what your of your take business. you between we at within internally that modeling, X% just,

Mark Mader

professional that. When it's And to another part enablement. deployment training I think and part we and one and add alive thing well. of think configuration one assistance, is is about services, that services part

adding of all of foresee And aspects don't our services. I that to think, customers. on professional we a all investment at We from don't type capacity slowdown are

Steve Koenig

I customer that would could apologies little a that how and what that. have Maybe I duplicating domain-based would But question, one about I Thanks, an activity we on was it. be bit am call appreciate even if follow-up very comment late. drove a acquisition should you organic basis. your And think the good Got did on I the get going forward? on

Jennifer Ceran

quarter. domains the front. motions of to we see just it's And invest continue doing on we We and same this for are will continue saw our have awareness to to growth every we quarter a Well, join more few that hope I been product that going Smartsheet. in mean, that on up sign

Steve Koenig

and Terrific. a congrats good on quarter. thanks Well, Great.

Operator

Our question Ryan is from Stephens last MacWilliams Inc. with

is line Your open.

Ryan MacWilliams

how in a Hi point customers me XXX guys. or squeezing or to about year-over-year that quarter, think compared more prior capability in. Thanks products for unique on maybe should data On your we the bought basis this one quarter?

Jennifer Ceran

it's you a have Smartsheet certainly, have view a around a point been more. think Prior and about center been for things. we around Dynamic few to year I exact data accelerators Well, a the now. ago. don't about about from year But just that, other for year now. control has had

up. definitely it's So

Mark Mader

Yes.

customer capabilities-based look penetration we base, exceeds our that of as at the products into now think XX,XXX. I

be have to bought our reminded that them to-date. need small we of course, percentage a very Of customers

early buying them, still, from we have see how develop package of pleased now them, But we So to as price we think we some bundle next, capabilities innings how this were we we how multiple evidence on that it's very them, us. we we again, what think about front. customers

being we again to those see learnings an that important apply the standard we license. So hopefully pattern complement and as

Aaron Turner

is And we add thing unique in one referenced XXX. quarter. reporting Ryan, data customers buying capabilities this this And points, would in I QX, The or the only we are is XXX quarter more for Aaron.

are point data you I those for points, if to. looking are concrete ones So the would

Ryan MacWilliams

feedback. from for? any comes particular particular interest customers the are platform. any seeing that are there of from from things XX% a previously Perfect. recent mentioned asking And on And you enhancements AI What then Maybe an have your product industry? been customer standpoint roadmap

Mark Mader

Yes.

So across base to of important. our of we use of kind of create I a don't Smartsheet feedback that drive of we we functions tendency. have that still number a say we number of XX% mechanisms different there I cases a would say, would broad and and roadmap use of that's so different kind very that critically and customer see central specific use lot We a really see any industries. on

get in into time the What real the work we are for them, in work have things insights find customers status like invested automation, their more looking the make that's of it do though that do or that aggressively, whether things what's to organizations. things platform within for work pretty is we make which happening easier

key and rapidly So are very a dashboards of value. of are kind growing area

things have that really are going think capabilities that announcing some addressing see are differentiated that hearing for while. to will you we been be some then customer we And and a some ENGAGE, needs we in

think I fairly broad say, based. would I so And it's

question. forgot What the then I part And the your last? last of was

Ryan MacWilliams

-- any Just on updates

Mark Mader

that to and Yes. are to where you. going be Thank say underpinnings Yes, most I end-user believe be I sorry. am important I ML that years. we AI. almost over are going many applications next to reminded, AI or was XX would the

AI work that users some for by AI, ways invest users, you to like continuing configure capabilities how will powered in our things to notifications their easier. we it to start are capabilities of see And our we for building so suggest make how and just prioritize user will we

In we actually cases, do, configurations those many will we will for perform them.

we still ensuring early. emerging. And that are for to is very And customers. so leveraging our technologies still technology That are we super are to better really make those I say, we platform would but committed

Ryan MacWilliams

Perfect. Thanks for so lot. and for question. the Thanks detail thanks my a taking much

Operator

does for turn back Turner This to remarks. will Aaron closing any now it conclude Q&A I the period.

Aaron Turner

many quarter to you all with We next thank forward seeing you again hopefully you speaking Okay. for joining us Well, ENGAGE. of at today. and look

Operator

conference This today's concludes call.

now disconnect. may You

Smartsheet (SMAR) 4 Sep 192020 Q2 Earnings call transcript