SMAR - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Smartsheet Second Quarter Fiscal 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Relations. Investor Turner, Aaron go please ahead, you, sir. Thank

Aaron Turner

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

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

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

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

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

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

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

Mark Mader

capabilities eight Harvard call. year-over-year. big with employees by XX% empower up have results in in increasing that leaning COVID. Revenue innovative proposition to and QX including rapid and $XX.X of results their we XX% their up part We agreed that stabilization increasing headwinds of in expansions on found XX transformation. demands of than making was our than of to QX earnings Business the use total Response, of than during year-over-year enables adapt QX, ill welcome we've QX. up a played on the in reinforces more XXX,XXX more exceeded so and quarter up serve $XX.X use value of increase XX our range our the XXXX its COVID XX billings resonating support revenue number our Aaron. make increasing to Dallas. customers a reflect teams critical leaders We're we're and national value data our provided is consumption These $XXX,XXX, by Thanks, respondents hub base over XX% our faster, our Review X of included market It Smartsheet are Doing ARR brings with than and our more guidance the that to customers. users This or offerings, the wide XXXX QX investments by These XX has to million, related And second help paid were communications fact recurring Global personnel sequential disruption. agencies, both address patients. opportunity people reality and the track business business in GMR, earnings dashboard from presented information pandemics the reflects annual last macroeconomic call. organization we’re confident better the the that Medical future shoots collaborators communities the despite to and to new PPE ensuring quarters, GMRs added seen and we're and the findings from million. increased to by critically from that reflection in and largest study XXX to treatment by communicate a ultimately a those recent signals seeing ARR that in customers. companies the time in an right of $XX,XXX, real QX, challenges, up XX,XXX Expansion from that more their ARR to $XX,XXX, provide Smartsheet, enabled a within success more their technology in government the XXX the users and in informed of specifically seeing in decisions our green continuity enterprises agile clinicians million, their

of to requests, team multi-stakeholder including dramatic disruptive campaign for manager. since efforts, CRM launch increased implementing and control project execution forms, center campaigns world's businesses, and intake campaigns, global companies reduction One required the times, The to on food return and its campaign Smartsheet of transportation their drive thousands in and known increased reports marketing global and most Smartsheet leverages shorter per including demand delivery spend, execute capabilities volume ad tools on reporting. the benefits cycle campaign dashboard

in customers, existing noteworthy In addition some to saw deals expansion QX. we within new

standardized network US rapidly drive expanding a a manage of the process invested of which largest practices pediatric the to medical in in Smartsheet by portfolio to For example, acquisitions.

enabling transforming labor prepared using management address expectations and that and their cloud-based the accelerator quickly A resulting more is time. apps significant teams digital workflow empowering to is this change. all solve. true day-to-day improving of the which than QX, that a these the to businesses and right pressures, solution organization, the partial challenges the demands business simply enterprises of work easily solutions not world. that throughout A the competitive acquisition To the making that from impact how consistency ill both capabilities, collaborate that bringing missed with processes. the but enables collaboration We reminder teams flows are and inefficiencies. the COVID operations. way for business and that are users innovating innovate of impact our lack to dynamically Two, dynamically company and compete, and key to by actually the opportunities work is as deal to traditional and a real it build a Among a the work the Brandfolder, content both involved just of workflows digitizing of collaboration change teams. people workflows constant will in and distributed marketing most served more leave lead belief that Successful of action integrate With empowering the are sales by asset challenge world changing to Businesses, in their apps not foundation future streamline in their rapid and to announced the work and by only the create integrating the for strengthen in by dynamic three vendors with other and platform distribution. projects and workforce. digital the creating those but and dynamic and change, does to and between they creates simplify, integration regardless M&A areas. is for part to the figure nearly undertaken the customer by effective simply transformation. by challenges with means managed dynamically having in delivered and Our of that content shape six another project processes deepens of management and with will cross ways collaboration, customers, about colleagues, well-intended, must completion, effectively cumbersome inevitably, problem. in individual a or versions provides in ability reality collaborating The moment, through and maximum content means is businesses being businesses act that as for and advantage. new people its activities, only content means the on These the part them information edge, a initiated, August ability across One, many impact about things, workflows. achieving achieve motions, our continue seeking size agents XX, three their how of solve critical flow associated leading visibility work as the of are to digitally and and work team and a M&A for we other believe and but under is

elite, operations. By of management gov as capabilities automation capabilities a end-to-end information federal adhering on workflow can digital that other marketing SysAdmin internal manage, an execute, And set Brandfolder act content stakeholders. consistency how and visibility provide Bridge, Brandfolder’s to report aggregating become of that our distribute workflows, the part to offering offer discoverability effectiveness new and a range specific largest managing core analysis deepens offering, XX,XXX business accounts. lifecycle expanding introduced reporting, of center, Control customers Smartsheet orchestration. external engine via assets enhancements addition community compliance and change, now product triggers content for ability to teams creation, class our the of Control marketing platform, both portfolio and usage at and scale process supporting admin government to streamlines the meaningful our in security on logistics cross work. their their actions integrate an while application project and automating insights Center we a provides with experience Along and regarding resource our solutions code and capabilities delivering and enable with marketing by enable provides In center platform no requirements. We them, to Smartsheet’s for quarter, and marketers, dynamically the the excellence to deliver throughout for the among the of entire on which of enterprise our and for this feet, govern we capabilities

almost at among product Posted October generated Soft forward Customer Bridge have We a and our make across launched registrations go. as interest Engage unveiling meaningful to customers will to we impact connect in with has additional look a on Annual our over enhancements largest on their month they a data and virtual received early Xst. Fourth offerings Global July, platforms. XX,XXX significant Conference event, how

early again this us by encouraged we year. hope join very you'll this and response are We

Finally, world leadership Amazon I'd our talent team. the call such from touch levels and Microsoft comments, companies year, to all experience the leaders, as ServiceNow, of beginning to we've the my several operating of like senior briefly Since at success the on new energized with before With to and I close help leaders class financial attracting ideas added to I now look and table, business. results. over the on the additional that, Jenny these scale to help to I'm us let Jenny? details our by me bringing the turn deliver. forward they'll the are results provide

Jennifer Ceran

guidance financial XX% Mark, versus Thanks, and million, were the quarter, Overall, buying up improving everyone. customers. $XX.X Revenue and delivered year. reflected results welcome $XX.X came last year-over-year, which at million, we issued trends in XX% we last billings from up above

outflow million of balance cash expected Our loss and better We quarter. non-GAAP million end of debt $X.X $X.X and no capitalized operating respectively. cash on also the at than and came $XXX remained well sheet million at in the the free with

Following which to our cash the recent of $XXX to of plan use acquisition our Brandfolder, close month. this purchase million announcement, approximately we expect we for

are our our are I'll expenses the that unless release to on to color in GAAP a second results, the non-GAAP was on financial Next, call. quarter basis results and our reconciled references posted results earnings before more presentation stated and otherwise and operating provide all

revenue year-over-year revenue $XX.X was in growth As quarter at And year-over-year. representing year-over-year we XX%. XX%. $XX.X was representing services growth came Subscription up revenue million, million, million, second mentioned, of of XX% $X.X

to Turning billings.

a came billings purchases throughout which exceeded in quarter. the saw guidance quarter our at as in from Second customers million, improvement we $XX.X steady

a As COVID formal ended at June. we end accommodation the result, our of program

with second offered were monthly, quarter reminder, The X% from quarterly semi consistent semi with terms X% on represented And our saw estimated COVID, million. of who the for and annual special what terms. or XX% quarter. the billings subscription approximately a billings customers is payment annual in billings As we was program impact total, in quarter, approximately are this the billings of $X extended and these multi prior or Quarterly, year this annual materially the by impacted

a represent more reported than to have customers per more year or XX,XXX Moving ARR. per now on versus customer paying year. paying year, more and of paying us now us more total or $X,XXX XX%, XX% or and respectively, $XXX,XXX we per XXX and segments X,XXX metrics, grew now XX% XX% XX% ago $XX,XXX XX%, These year, and

contract ended our to And Full XX% retention net Our ACV quarter up grew $X,XXX. domain stable the of line rate a and guidance was we rate year-over-year in to QX rounded dollar-based with the XXX%, we with call. on average X%. annualized value provided or churn

We headwinds we've to lap net retention experienced remain rate expect under our the year. we dollar-based until pressure, this

dollar-based As in down our such, the expect mid trend net to retention we XXXs QX. to rate

margin total revenue driven prior representing higher quarter. quarter, Turning was proportion XX%, percentage by to than gross our the subscription point gross a mix of our revenue this margin, predominantly higher one

subscription Our at XX%. gross stable was margin

migration During which for the will data residency. to completed quarter, in-country cloud, to the scale help our and public we substantially us plan

travel Operating X quarter. historical lower XX%, $X.X than free Sales percentage ago in expenses. X than Moving revenue $X.X quarter to better million, lower collections the quarter cash and combined as of The expect burn year ranges. the back in and a the predominantly quarter stronger with percentage line of ENGAGE, management. marketing due better prior improvement and points prior flow percentage than Note, marketing was expense as percentage customer General quarter. for the percentage XX%, the and to an percentage to and investments approximately driven XX%, and the quarter was in in negative Research expense points half programs. loss points was operating our a year ago see conference, was the other we administrative in marketing expenses. by and revenue annual with X year cost than approximately million. expected better marketing a line as revenue with was Cash was in of development was of and the increase

total XX% represented our expenses expenses. personnel Our of

me guidance. Let to on move

for Mark and As in announced stock. August $XXX million the mentioned, of we acquisition on approximately Brandfolder XX cash

and this million later $X billings close and to to $X fiscal Brandfolder contribute expect revenue year. to million this approximately We month to

operating million million. of Additionally, ‘XX year be cash operating growth we and the expect $X fiscal half at to incremental to loss in Smartsheet. $XX of an to second breakeven integration flow impact the spend and support cash been half has negative expect into to we incremental free second their Brandfolder flow

our of below, as of guidance including purposes results transaction are if For as we closes expected Brandfolder in expected mid-September. the the

million, $XXX range million of loss in on $XXX to of net average to third fiscal $XX $X.XX be in $XX we be the loss weighted the expect the million For to quarter, $XX and to in million. revenue operating be to to range $XXX million the to per million, non-GAAP outstanding billings $XX of range between share based and million of $X.XX shares

cash expected $X range free the and is to $XX be of outflow Our million. in million

on year loss our for $XXX average we shares approximately loss the range year, $XXX in to share million $XX outstanding. and the of fiscal full the $X.XX expect between non-GAAP weighted For per based to million operating in $XX million, net be to range revenue to $XXX be the million of to $X.XX and be million

million least the And operator be full to year. free turn expect flow at the to cash over for now I'll $XX with outflow fiscal that, questions. for it Operator? We

Operator

question Your line Instructions] [Operator Terry [ph] of you. Securities. from Tillman first from Truist Thank comes

Your line open. is

Unidentified Analyst

Yeah, any like they of use digital just business and than Or a like? big thanks starting that the the Hi, business. but Jenny just different for larger of stabilization these a businesses? XXX you, question, trends that of That's the though, business power larger difference for mid XXXX that’s vastly capabilities look k, bright, market or Aaron. are more customers in to is of and it's seeing those to they type are that's terms can curious cohorts XXX tend see what questions. to k Do nimble Are they the you lot to my see I nice see improvement. of the a, the first Mark k, not kind customers I'm And I'm My maybe taking of and very these And first ASPs? the question. Mark, be there. more sizable larger

Mark Mader

larger to larger the transactions entities. typically, Yeah, do map

with additional value who capabilities size figure is absolutely typically well, trends with class of size, of However, through as there six ARR. I mapping as would as now could provide customers to companies customers are mid that Smartsheet. But today, largely to look you higher you the Brandfolder’s customer be

Unidentified Analyst

Jenny, up just And follow a then Okay. question.

internationally think Thank accelerate? that see I think Q. with in an in-country? But Could start making about you've we give been you put to it us update of as how do cloud the investments on can even having we and lift international you mix or you. And public total? now a the that

Jennifer Ceran

sure. Yeah,

XX% we the in a roughly couple of reps And doing we now. start well revenue UK are So years our it's there. the ago, right and did with

XX carrying we this finishing Australia, the We have it's about With ramp just we got big reps to a but started still respect so see reps over year, opportunity now we've of in just there. small, relatively UK. quota XX and

Operator

Your Zukin next Capital. line from RBC from and Alex question comes

line Your open. is

Alex Zukin

taking Mark, my know, based call on of your Jenny, when about do are question. that's August, kind of we where out guys. update up? the and maybe, saw terms for start trending? for you kind in to the any are you that kind on come cycles, of Hey, you you metric, of, ultimately maybe as then deal we, net what - first dollar of on around coming trough I in specifically kind the we the start to expansion talked field through how past for mind guess one Thanks And pipelines? the back in know, that And the the you improvements of go can

Mark Mader

the did we quarter, see in saw quarter. we improvements what a to throughout speak I'll month-to-month

into yet that are conversion at see on throughout. improvements As we levels, healthy quarter. the did had rates call, pre pipeline And the we not last COVID while I pipeline coming shared stair-step against

was that good build We to just pipeline August. really month have set did largest in So see. our again

in value. in engaging looking we the to And, are interested second half. can you customers They're add extend So how we're hopefully pattern this conversation. know, into

Jennifer Ceran

rate, midst and in COVID. the the result of are respect the initial And starting kind of the then still pressures with as April a saw some we to downgrades of in we expansion retention - of initial

we net So somewhere seeing year it the of get we period the into could we low to of improve, through end before see coming do to XXXs. it we're improve, need dollar in start rates going mid the that will, see XX kind dollar retention but net months the to retention XXXs rate could

Alex Zukin

just And it. back could Brandfolder, the more you the ramp sense around can before some write-down, going size kind year? if how I Got was there and next sneak what is one the revenue of of of that's to in kind give any us up

Jennifer Ceran

did - around question was the So your revenues Brandfolder? around

Alex Zukin

Yes.

Jennifer Ceran

Yeah.

know, as know, of that But acquisition. ARR in are So now double high And right the not grow start is in accounting revenue seeing off we year, to that next we double to you continue related it their low expect the much we digits. digits. because the you

Alex Zukin

you. Thank Perfect.

Operator

next from line Oppenheimer. from Kidron Ittai Your comes question of

is open. line Your

Ittai Kidron

A of Hey, questions Its me. guys, couple from Thanks. Ittai.

First, how quarter? Mark on And the about the a up. have I business vertical, side, can look and Fed in you follow accelerators that did then talk

Mark Mader

an capability they coming go integral add Brandfolder good into sales, market. Yeah, with one with quarter, strategy our it value family. a marketing why to of on solutions, continuing part we're remain It's reasons to the now our the based of was so

So to resonate. continued that

quarter our was did to date, have which we see. best great the to the Fed team for On side,

the it in right contributor, of step take to really the good but team a direction. see in You the was small a still scheme grand things, it's know,

Ittai Kidron

this about dig to of you also Great. to it, nice I assuming Smartsheet seeing respect of you're that. I the accelerate if year-over-year billings acceleration around quarter low confident billings, Brandfolder talk XXX not growth, just guess billings And into enough million, here. you in and from doesn't with components that which reported? again in then a you that an on I means the want guidance, growth, could your that billings you're your mean, like so Jenny right. not performance billings I core sound Maybe take for somewhere had billings, out will or XXs It really Brandfolder, you're excluding

Jennifer Ceran

So their that million X Ittai, four gave full I in we're know, that's weeks. as next and think contribution, the year sometime acquiring you we the them, let's clarify

to you if So billings, contribution QX it's quite about think their actually small.

organic acceleration an So in there business. is the

Ittai Kidron

Got it.

good. very Okay,

Jennifer Ceran

quite going And COVID. the back in a components sort then just where for need know, they're pressures some still, had in SMB, strength saw the I living in our goodness really of enterprises, enterprise, nice we to growth But of We're we you still a mean, contribution, there, the of the not be. they on still of terms to lot billings, of of - lot of larger sure.

Ittai Kidron

Great, thank you. Good luck.

Operator

comes William Arjun Blair. question from next from Your line of Bhatia

is line Your open.

Arjun Bhatia

from Thanks Jenny, good as through, in for large to my Smartsheet? bit the to macro to bit larger starting But k. new dynamics over pipeline Certainly are enterprise. get to maybe wanted on that this I'm coming trying the urgently just are to outlook? the last beginning to are you that deals closed guys. that confident close XX about just on the little at these a I customers Hey, expansions taking the seeing XX expansion come follow-up little strength are expansions into Or point on a the just quarter? that maybe understand these were XX pipeline of looking curious deals And question. of when year kind deals you're that in more customers these deploy the the now see Just the

Mark Mader

time. Mark. cycle you year this fairly see have terms in short, Yeah, continue mean, I extended know, that to is or of, businesses a closed we even relative maybe to a

business. are in about mindful opportunities are them our People I urgent. these wouldn't fuse. as a class of I fairly say necessarily still short discoverability would the So being

extra unlocks. think have they're applying trying that scrutiny and to there's I they're

situations. So to very those we're be trying responsive to

opportunities. it's have the we our who we $X in quarter know, really think XX a opportunities, And part And, a substantial This I levels. customers in the the ongoing million that for that's at testament one was us business. of sense XX this big is, value over pay us now we elevate things ARR. talk k team's see of k also strategies, that's know, the ability about a XXX to to built you to encouraging you

Arjun Bhatia

in part It's healthy out your that kind clip. of you like you remarks, It customers. more seems sensitivity? of at And to customers over into can of other user Mark. maybe base? the stuck bucket on Thanks, us what time? Can a free to of free the What and put in COVID that convert is trying is just are was that more prepared it you kind the later more I user them seems time? little users at seeing an seeing great Are hear. over kind maybe from said on those looking from Mark, And staying cost free you that's collaborative then base just the there free what the you're a give growth. environment little there's where converting this bit rapidly gather And update than actually is paying collaborators how kind increasing a like

Mark Mader

to needing about can our engaged. friction we opportunities a I you there the be low more sharing And right know, very one right we're signal company to of ENGAGE, share beginning deeply to we're And, in it's where add of we things believed at will And Yeah, how the and big have people value number the job one thoughtful we, now. is and collaborators, think that those collaborators. add engaged value. it's a since to series But community and value have now, are getting to about get releasing add while model. people a that upon another

and about itself book see in talk can themselves also tailwinds ARR, can the to ways. you in pleased that tailwinds, community manifest we It really deal different can you have size. manifest a we're So when in

we're people now. platform real again, see come right pleased So to the into

Arjun Bhatia

Great, you. thank

Operator

question next from of Stanley. Zlotsky Stan Your Morgan from comes line

Your line is open.

Stan Zlotsky

embedded, the some have as following before. great for just your up quick you Good up. of asked guys my through thank Hey, then you have into guidance quarter. And function for far went you But question. and step far guys. as on follow Maybe see the improvements QX that other to as of And the macro afternoon. know, as, as rest for ones improvements taking a the what's It's year? you the been certainly know,

Jennifer Ceran

to well. you Yeah, and thanks, as Stan, nice hear from

so not expecting still the half generally will V help a we the shots lot there's recovery the over around think uncertainty a we’re will get back of shaped that We yet. around have So election, us in we when we just - of kind we're terms right kind it's guiding. what still accomplished, at guarded. But COVID. our We're of looking guidance, and how front see what eyes, in of that's our in of

Stan Zlotsky

guidance rationale And giving is not billings reinstating Got year? the it. year free just us for full that the but some cash flow directionally for guide

Jennifer Ceran

could QX, we we bigger be on for in billings But until really quite through outcomes to no maintain a guidance. there's range want positive. mean, I exactly. QX, it of Yeah, see

Stan Zlotsky

if the we're Got reported a k, far logos XX ARR. “graduating we at know, those X for XXX is certainly tier as revenue that k, in it. buckets”? of you great paying some customer customer as customers look function metrics, million to numbers, on could seeing, deceleration k And metrics a XX retention $X not, then now more and into and there's of that higher I the than When one just maybe sneak more, net just, the just hear above

Mark Mader

the XXX And - I over mean, time. - were our long relative, think a it's think XX% over We triple I still a largest number. for in zone and so right? digit still, it's pretty impressive

to - cater these and this backdrop of new and software the deliver customers in macro to We invest have huge also a to to look So, our our the for to ability. still customers. we existing you situation. continue of there's for best know, the sell think at upside we these value And and customers

you So, this and best through down. hammer we're the to ability know, navigating of our keep the then

Jennifer Ceran

than what Yeah, XXs you in at XXX look QX. we maybe the k, bigger saw were that, and number the slightly on change in to they add just of if actually

that's So I very think encouraging.

Stan Zlotsky

guys. Perfect. so Thank much, you

Operator

Your next Jefferies. from question Thill Brent from line of comes

Your line open. is

Brent Thill

good show reps and think QX on Given used pipeline the Are build about I last closed. before, that larger on afternoon. starting new sales you'd Good in seen deals areas of opening track? that for know, that some are along? builders And haven't that you over mentioned is strength? more Mark, still fiscal Jenny, wanted Is you just more maybe are you that new cases add pipeline you to to, how year. there ’XX biggest excited coming you're kind getting are then,

Mark Mader

On would still say in the the have used today. cases served that side, well us very we're areas I

case, sort use than are in identifying it's well. areas a performing say rather and extending where the we So I deepening would of new already

like I the well That think to marketers the hand so we're improving. strength marketing is improving solutions a right we is at project, operations. portfolio vision offerings saying really - have moving and going really look are where of those those now. we're the looking veins we to from two at lead for for adaptive be And and our - are to when people responding marketing provider management, operations,

a is Jenny? a say deepening it new a more and would So improving it's of than new vector. I

Jennifer Ceran

where reps, add to we sales demand Yeah. and we strong with to a And pipeline. and strong respect see continue

reevaluating so. been do know, so, and to we'll you we've And quarter every that continue

Brent Thill

Great, thanks.

Operator

Your next from Turrin Michael Fargo. of the question Wells comes line from

line open. Your is

Michael Turrin

afternoon. Hey, Great, thanks. Good

XXX large the than support side, to on still k seems earlier stabilization to customer mentioned some of XX% customer comments, metrics more you that. certainly have the back Going the

quarter? span market you especially can any more commentary business maybe the Just given customers, stabilization on of segments saw compares color what last small and is add there how the up that across other some to that among you

Mark Mader

reference made was broader market. in of the I the think stabilization a context

SaaS sentiment from our buyer And what we're so CEOs, categories. or other peers, fellow hearing [ph] from different

So higher it Smartsheet, was to side, more we're level. at I when mapping fundamental in specific not requirement a broader. And enterprise to selling an of at are but at the business seeing is larger dollar statement the real think transactions the that a value, terms you what of

to ability for know, can think articulate So whether less betters, sell I the you that wins directly feeling you general, great a business and like about about is high. it company's is, are in they productivity what delivering mapped to collaborating

Michael Turrin

can is that help cases acquisition, up you. great. additional And going sale whether reach Brandfolder around that forward, cross as well? it's tell the or Okay, open use more What opportunity? there us Thank any then into you could

Gene Farrell

chose deliver Gene. I'll so for because hear marketing with marketing really When believe from the that of it such really capabilities need Hi, Brandfolder XX,XXX the feet call build signal look acquisition speak over half, many is starting we to base that to the we've name we cases. strategy experiences and use it's at different customers. And and last, a broad it's of elite across our I a consistent a and Slope really piece. you the Brandfolder we set to and had industries think Yeah. Michael a year continuation with investment

lets really on creation So we of from opportunities importantly, And management content on we really very end end of our brings and into the other that is digital it those But play was are think bringing for a extend across just before piece us. marketing use cases. variety it piece Brandfolder brings distribution. really our we complete a think into element missing a us beyond management through bullish that content platform powerful capabilities supporting portfolio content into marketing more to asset the capabilities and to workflow,

Michael Turrin

Thank got you. Okay, it.

Operator

of question line Your Berg from Scott comes from next Needham.

open. is line Your

Scott Berg

a the from maybe you to don't other some create further bit, see everyone. taking the Congrats what's to competitors that I can more comments the have product expand And mind separation? upon one maybe thanks help for in Brandfolder wanted Hi, for your dynamic, if acquisition competitive guess that I Gene, good can on my little questions. guess is quarter. first you a I just the bring

Gene Farrell

hear And beyond stored the workflow then is you at look approval experience Yeah, along some Scott, differentiating. platform, whole workflows, and marketing the other them the the work the to content management interplay there there be we addition of I think there's with unique built, that our players that, and think to that is the first are and at Brandfolder where is between give workflows, first content brings will marketing, to out a space dimension we purpose many managed, shared class believe trying be and couple to what way I where are the look content offering opinionated not integrate kind deeply engine, compared would a talk that of that we tend marketers. believe to customers, very to can we creation pretty collaborative distribution, very solutions a serve be we content and when And of solution. if a and in process complete mark-up can dimensions it generally the that,

and platforms differentiator So to platform a to going think us. is together they things work. be to multiple to configure We try that end with a empowering for to be end our end team able up wiring make

Scott Berg

it. some the is difference, the of much marketing we'll – know, balance follow operating million, the that given your or up on I million perspective, Helpful. guess don’t it in call I efforts from improvement Jenny, third up that it then sales I we step of maybe the is you're $XX guidance that about should for $XX quarter macro? but And how - about ENGAGE, additional the think ask Got obviously investment, question expenses. for guidance, in seeing how a with should assumes maybe

Jennifer Ceran

we Yeah, our I mean, ENGAGE conference. have

to are other got what So see that's We've a we spend incremental this there. that activities in you marketing compared quarter. involved

off integration, things big So We're that kicking We've we're also of got part Brandfolder doing. that's product spending a it. that. on we're some

our components, with are so another those SOX, kind major scale, efforts the And area and investment. some of operation of continuing

Scott Berg

Great.

Operator

Your David next from question Canaccord. from comes Hynes line if

open. Your line is

David Hynes

want a question. my Mark, to taking ask high-level for I thanks competitive Hey, question.

the as really how right, them time, you think capture about competitive? vis-à-vis and sauce you enterprise, secret it's If do So of case the but the is automation. think the dashboards, as in you platform, view if RPA project to the it's Smartsheet, I that's kind in do success workflow over vendors and I data have view management, continue the

Mark Mader

and is is And And huge devs. be to saying citizen participants, businesses IT, is I participants have different workflow what going do many years. The value from that well. like about provide the impacting most doing offering for to host core effectively. a serve been workflow what Bridge business as offerings, of within you the talk we're citizen edge. additional category. developer core IT which to, I we does think And would utilized different We've units, really whole by a

a known that not and very dynamic platform need deliberate So say process, I more would more probably controls, or in the to investment very more how large it, change. respond set workflows than less very, process. with you And that or a argue have is you great on nimble shouldn't they I think it's suited larger heavy much the it's that requiring but I really have that It's scale, preference. usually very for forget it work a are targets less And customer less RPA, fluidity is CWM the dynamic, space more best nimble to platform. upfront

David Hynes

yeah. Yeah,

of Okay, continues opportunities that then Any of terms a demand follow-up, called to you that new the makes versus August . maybe mix expand sense. out. change pipeline in And build as just improve? the in

Mark Mader

activity on both materially? sides. No. Not see We

David Hynes

Very good. Thanks.

Operator

Rishi comes Davidson. D.A. next Your question of Jaluria line from from

is line open. Your

Rishi Jaluria

my the to of transformation. between questions. to kind for follow you up. speak Mark, got remarks how want taking difference that kind a Can in versus two I've Aaron. prepared comment Hey, you go Mark and so you? differences of to about I bit your little on then those the a pertains digital And made Jenny. back Thanks digitization much between

Mark Mader

Gene Yeah, what really I with spoke which about builds on example, Brandfolder. I'll think give just an

can might asset have mean on that globally, actually whether around, you a web online digital a be an insights So to marketers it's what actually to able transformation you can product it which in folder, the is digitization to insights an to a can digitized, website. Digital types today assets. deploy into asset has utilized. and that Those be that ship get digital online of not team the given by it's you the store an post get might provided link. things are somebody and can do And be it most into shared activities, shared having to aren't folder, managing

different? fundamentally directly. flows But out might accordingly, feel getting recent asset. fundamentally great process guess people able is our to ties most that one probably their So having they and most insights acquisition and that Are about that's change to their different digitized I

Rishi Jaluria

right it. as just getting cost clearly result operating about know, you're really coming are want on then think some - I margins a I'm about savings I margins some T&E. Jenny the sure And when effectively saw Got through of think to margin That's zero having helpful. that you front, operating

normal, can any to is you back be going would post snack COVID think forward budget are it spending permanent savings, go color about there's going how these ground T&E permanence and is of a kind of you related helpful? the direction you of some know, of Thanks. to there, whenever environment, be middle As know, kind that know, you kind be and cost some you of to pandemic of some there there,

Jennifer Ceran

kind gradually of think look view some is come different are methodologies with of people travel. directly to to post of to now doing to too it mean, tell getting like point early sales a without what back used I clearly my will self the lot I we'll but communication levels, having to COVID, certain there's it's that personal really I own calls efficiency of think

think there's I to going So some benefits see be you there.

that's to facilities, some COVID. we really post they I whether all from their generally, think, that companies strategy. think home think in on hybrid whether is could office, amongst scale interesting going their front be in workforce there's work how I see a office, and the area they're between one about and And

Rishi Jaluria

much, helpful. so That's Thank you guys. great. Okay,

Operator

from Citi. of Your next from question comes Pritchard line Walter

open. Your is line

Walter Pritchard

side, you're platform, Mark. in for terms being Two more product sort on to One free of monetize? wondering in of types questions if on people thanks. but related of free the than in and the so customers maybe the I'm if traction accommodative even move budget an having you're seeing Hi, that and wanting more not sort of the to volume past users the represents opportunity

Mark Mader

is that been Yeah, that a not we've observing. pattern that

We accommodations enable have special to for haven't users made to privileges.

that we're So observing that today. is not something

Walter Pritchard

consolidate to customers just look guess, they that seeing as question, in multiple any have throughout your you of they of pockets forth sort business this things vendors of workgroup be also, sort seeing solution? And you towards their as terms streamline more they related just are might of the so of a COVID then footprints? category I to of standard norm a look and and push initial in Are departmental another still

Mark Mader

we in we XX our in there as to say out, very large we're of a our customers be call, earnings early of were months more maybe favor. But and this multiple out. couple to vendors I pronounced last who scale on year Yes, some consolidate expect examples category, would saw - that still spoke did a I would

a out on I again, it. that's pattern say report see notables when But we today. huge we'll emerging wouldn't So

Walter Pritchard

you. great. Okay, Thank

Operator

comes KeyBanc. line question from next if Your Steve from Enders

open. Your line is

Steve Enders

great. international Hey, couple Thanks in question. the announced taking for partners know a my of I quarter. you

you Just seeing within wondering Australia? in continue as you're to kind both and the of those efforts, UK what expand

Mark Mader

at deliver. about look company Yeah, about a can into no-code things app. work you when what does And at scale. things what things that like of bring when we're at when not the delivered, delivery value we partner business their feed Bridge, we around that the Brandfolder, global what directly I quite that all energized being is do at a think partners building announced a These customer, are things like. are one part to as does our growing do of of day what like just last benefit. the the value you can we're leading your about a when you think you how But you enabling ecosystem It's look analyst partner the looks doing ecosystem

continue European would this was great a for to us do had We here. I last milestone. which So significant a a expect quarter, expansion lean to us partner

green you of one these shoots that, grow them, we see that signals, and be to footprint. continue of would some know, about to starting we're expect we that So talked to

Steve Enders

get for Jenny, maybe to And better sense. a just want great. Okay,

COVID you million I quarter think a in there billings related to said the the $X was on front. impact

Just what's wondering of the built into to the year there? kind rest of expectations

Jennifer Ceran

for program. we guidance XX% accommodation our is QX. billings same mentioned, my mentioned expectation the it I were as quarter for formal of and and I Well, about our this QX ended also annual roughly stays

Steve Enders

Okay, great. Thank you.

Operator

JPMorgan. from next if comes Your question Mark line from Murphy

Your open. line is

Mark Murphy

you. thank Yeah,

trend? the be healthy to had you Mark, in increase wondering the boosted free remote ads maybe you the paid in if seems seeds? clarify, I QX. Or about this more was number at this just by Sorry And actually and workforce in of drove that user all the top ads some collaborator funnel And quarter? did mentioned did delay. user you see that improvement of relatively a can

Mark Mader

to tough Mark, campaigns makes say, it's it's what your tough to of improvements, attribute it's, really it. caused Yeah, that because number when business multiple a runs

the factors So that was it and it. app that are AWS Like COVID? a could completed our Was it substantially fact number team increased there of performance the dramatically? influence

revisionist So say, I it. this is caused think easy it what it's of is - and sort to history I think

served break we as able have that on know, as that tailwind don't don't declaratively a COVID in I know an out think dimension. collaborator, better the we free of are enough for - created population, reason. which don't us. things I think we not a yet terms to may the to I was overall experience would say be that do certain the there But And and on say paid we you that we report that did

Mark Murphy

Okay.

therefore, you would working ‘XX with the thought? very can certainty, more think QX you and little what deceleration revenue lag QX, is any know appropriate of up, a shaping you'd follow today, QX I and you fiscal billings be year of through a to reacceleration? As a do it's maybe early still up Jenny, kind of of effect understand just given is be Or kind to here and slower but think see that in

Jennifer Ceran

don't I Mark, I ball think [ph] really It's still the early. yet. call that can Well, on

that bottom know, to next and think will in months you better. I we it's too feel be stay optimistic I'm the that- year more But couple early we that the And we quarter. optimistic saw of ball. call last the

Mark Murphy

you. Thank

Operator

of from line from comes Keith Montreal. Bachman Bank next question Your of

open. is line Your

Keith Bachman

from because and to I Jenny. surprised Jenny came it ask Hi, big about that churn back you July if decelerate wanted me. Excuse really retention the down pipeline you not talked to expected the upsell, thank to thank I'm But at and surprised I'm looks drivers one I very I to two much. you. want all. and that go promising rate to little deal. Hi, one Mark. that a here. think to in you've about

And stays change. I am you rate be continue or to So guess, will that roll churn would upsell the I surprised surprised I'd the I assume might appreciate relatively I that the contracts over. while constant. know,

next What So that retention between expect churn of variables get drive do this the worse and the two over to would upsell out? can lower? couple net quarters you you key just tie

Jennifer Ceran

but churns Yeah where is we've - a logos losing on degradation stable, sorry, expansion our full have seen on our business. been

downgrades, and they're industry still travel had But of, generating a So more net example, result good expansion, it's at that for this number. downgrades who very as year, upsells the and would be aren't a companies like we've in any revenue renewal, downgrading.

because QX of time be to high going phenomenon, a to quarters our through a of going for right basically same flow know that retention how next gets potentially now, XX so ago, what likelihood to it's do is their come they're because there's four there's takes the it when see there's this QX we But at downward for yet. get calculated, we back don't think I on our calculation business I months look that. But and net stays feel in and back. full rate back I four quarters. I really more and Now, to that tailwind it dollar year, pressure

Keith Bachman

to we're I answer. versus second on to because their as I for that Mark, could you growing if your want a, a the back much any And thank be a talk the faster economy on COVID any what consequence quarter you a you're is than bit if And offer wanted you sure Okay, thoughts thoughts you to seeing there Thank would current so benchmark the for mean, to about be April dynamics. of come smaller competitive the is for sure just particularly that Asana know are I'm results. in you get particularly seem faster to quarter, filed to. results why the changes much at look not they on you b, just the you And bit pricing? dynamics, going wanted appreciated? while any you be growing terms even question wanted you. and know, then that so than Asana But smaller? in a if to in of I'm may quite

Mark Mader

being understand Yeah, complexion room is. exec the I it's think boardroom without difficult to what or anybody in of else's that revenue

we contested sales think change have We our minimis not different de is we of team, force seen we leaders, sales And to who of that's of the right. opportunities at We the a I at things. sales our talk talk scheme still a people look we material to inspect comments, and see in function this. our elevations, in partly number grand flying deeply

be task-oriented, more center into compare that is other someone they and about our as an another with provider things, dynamic may maybe two view, [ph] may So you go we who that person. never workflow talk we capabilities, and see enterprise talking control different against

Over going But time, of, do that's understanding big do dramatic so. proliferation, I think I think in we're what real from people are. really diversity are decade, people of their the the want when to companies shift in a will a this they providers people few still the who relatively company. go choose choose multitude technology last to deploying when and So, possibilities with? winners are I been so within such sort think, has the in a what providers there

of things growth the company opportunity, ARR really growth to look serve that $X very and on tremendous so we others. cater has very texture it's we're think at very growth So $X getting the all XXX smaller remain fixated how that prospects. think of one have we still when high those Fortune pursue about customers on X I our of a that on the lives. very are maybe you in a capable are from to before, focused but performing with we the slower business side, mindful - that's to long you're We're and long, to revenue from improving AND global of when I've Fortune getting revenue we be spoken continuing you And penetration how relative X, firms

Keith Bachman

the for many thanks answer. Okay,

Operator

questions back there are closing time. for will call And further remarks. over turn no this to I at the Turner Aaron

Aaron Turner

speak quarter. for you again thank all next us of and Well, we'll with Great. joining you

Operator

call. Ladies Thank and you for conference participating. this gentlemen, concludes today's

You may now disconnect.

Smartsheet (SMAR) 2 Sep 202021 Q2 Earnings call transcript