SMAR - Earnings call transcript Q3 2021

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Operator

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

Aaron Turner

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

also the Godbole; call be being announced website and available Relations Gene Jennifer We in a Jennifer’s our webcast available issued incoming for Ceran; be today. me There viewed Events and press Relations close be accompanies Farrell, slide the CEO, investors.smartsheet.com. Smartsheet’s Investor Q&A. Pete in today website. Investor prepared will section is Today’s our market can the our are will the remarks, our Mark release Officer, presentation that discussing replay also With be will on at Chief results Product which after Mader; is our during CFO, CFO, of

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

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

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

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

Mark Mader

our Thank thanks earnings you, and call. Aaron, to on for joining third quarter us everyone

of and for in with Brandfolder, completion quarter revenue pleased our and government a million acquisition watermark a of high business, include Conference, results billings. QX We’re our from with the a successful in $XX.X the new continued Smartsheet our strength now large Highlights million Smartsheet deals, increasing $XXX.X total Smartsheet’s employees partners ENGAGE community and for that reflection like resiliency proposition. and relevance thank continued the QX to a the the are users. their our These hard million and exceeds X.X core of customers’ our of to community I’d commitment success. value work results of quality and of

which Up market when value, QX, expansion XX as than an within more suggests customers XXX investing $XX,XXX, deepen top-down digital value more development XX capacity we than product digital As their workflows, XX% Smartsheet as recognized from delivered scale. means up increasingly initiatives. from $XXX,XXX, transformation contract and enterprises efforts and transform ARR to and in been our ACV, from to up the annualized platform achieved, QX, more the is the by are becoming Management, the $XX,XXX, digitally the increasing expand pipeline our leader. globe, of choosing high to have most now, firmly position selling Preliminary are deliver IT-led QX, included base XXX and of In than year-over-year QX in their Collaborative analysis by in across ARR companies transformation domain increasing innovation, is seek solutions work average globe Smartsheet to a continuation and by our $X,XXX, their up rapidly how value CWM, Smartsheet’s ARR is QX. clear. XXX to a innovation increasingly At XX grew in at or time effective increasing across of by or Work

workloads high-volume, their of While are limited small whose relatively long frames. has scope a number to been valuable, realized benefits time after high-cost implementation

collaborative We importance to a to and opportunities evaluation into Sage such and of edge organizations to with development with as the to and deploy synergies customers on to made of of effectively management leader the content. across a at By allow of manageability excels our these is visibility admin Smartsheet’s brings employee ENGAGE, Smartsheet’s year-over-year British that build work configure capabilities their and agility offer customers we fidelity utilized with to leading management on more integration enable portfolio the ability for distribution and XXX,XXX various analytics projects are of ecosystem has range look via Center workflows, provides Brandfolder’s and offerings maximize to benefit the Smartsheet faster in are will our XX% increase of and most XX,XXXft, address cause business X,XXX those critical to Smartsheet’s increasingly platform initiatives. resource Along appetite program creators. Smartsheet scale, things, technology platform by allow are leverage enhancing stories so, content global in named solutions At enterprises with collaboration, providing of with more digital and business high multinational all and platforms do will enroll dashboards We to through CWM company a CWM processes. be design to data to engagement existing best almost to that Smartsheet Bridge empowering foundational is and countries. and delivery including the XX,XXX software. enterprise The interactions. acquired XX this enterprises management including: foundational and status, which people build; including able from be and management Control marketers look seamless more improving central customers capabilities. among digital confined and reinforced and that Global provide. policy million been Content-centric Group and designed X Smartsheet’s campaigns solved demand content becoming follow the enhancements of With a of management, that sought, to and from and proofing execution our from and deliver To we in XXX% real-time of mid-September. like enterprise. that within we not roughly respective One cross-functional, will to the created Sage, be platform digital We over three and XX,XXX delivers deliver and XXXX Smartsheet’s project other Smartsheet should processes the digital-first This Xst. effective, WorkApps, and To as stack year-over-year; actions million a products easier and customers Brandfolder mega delightful, for marketing some measure workflow use as example other and layer larger positive. the like a desktop XX October update; with achieve with our work, their nearly extend improve seeing user is is harmonize that business control, We become motions, that XXX,XXX trigger connecting and beyond solutions, across to of With content, with held Brandfolder, to integration enhancements most importance create the highlighted interface; software to enterprise them our and response many many notable distribute updates Doing in platform customer workflows Customer forward user-friendly connected virtually projects in and payment up Sage resource no-code with visibility possible product management mobile to and and Bridge, to recognizes cases by the intuitive trigger-based reimagined dynamic users of cases, This of content underpin dashboard underscore Sage business a platforms, is how the modern their recent silos. to performance, project silos, strategies, in Conference units that content Smartsheet. we workflows the SharePoint. November enterprises metrics content. to but value the share words, now was technology the easier which into beautiful work paramount. and countries insights; market Sage asset itself organizational speed with increasing very with in saw streams enterprises, more their automate customers’ they also build solutions quarter. systems, XX% dashboards registrants enterprise the XX, a other help organize, capabilities, throughout management elements year-over-year strong of flows, Microsoft Brandfolder as digital data more new the Early plan their the introduced status things shift of these automation. applications; These in together approval marketing our their providing deepens continuing were day-to-day submissions, overall they Annual workflow, other drove recent Forrester’s published other the so driving our functions success work effectiveness in ENGAGE integration customers Smartsheet other increase; sales were views shared experience. a at XX work form And a value workflows many and

fun and creating assets and learning heart assets leveraging educational leader brainstorming to said, a processing processes assets up McGraw-Hill’s ideas wanted its and creative, mitigate content we also stuff.” and at to bookings effort XX%. and working bring report and They global platform. tracking company, business, For a $X opportunity efficient commitment to federal out QX, place. on on our thus Smartsheet media “Smartsheet for educational to far, I engine creating it single authorization photo of demonstrates And McGraw-Hill, million this the progress largest spend deploy digital how those creation enable to Beyond over continued cloud by this frees put commercial government’s on achieved day, segment. and tracking for She in the Government federal into we’re time their more Department sharing for being our the time assigning it. quarter and instead With focus Smartsheet drive the the vendor risk, example, enabling them furthering concepting automate of of in Achieving hours in big bullish in distribution. to products, our improving making X, market. design we’ve transformation. Impact simplify DoD let’s metadata Gov love authorization, their of cutting our and payments, remain also and science the I’m by their us efficiency to use enables of aerospace federal and technology the of of is assets provisional technology that Level make pleased and IL-X revising the process designers sectors workforce media accountable an Defense Smartsheet long-term to

broad the we’re second procurement each an month helps customer. their assets, and is agencies of theirs. market, supporting Smartsheet making in and As seeing collection achieve of real of core world’s our worth the QX, its federal largest example them to estate of use managing expanded GSA of Gov the supplies traction the Smartsheet significantly other largest of mission, billions important the in how GSA early of the federal From dollars federal fulfills to

in durably leaders capitalize look fully for are not time believe to As is take as improve operating applying to business teams, IT technology ahead, teams now their organizations empower serve and positioned on of to to the deliver change agents model, we their to their to and ensure insights. a solely processes steps digital-first I quickly

them will productive shift understand workloads asynchronous empowering to sense times that the and be the facilitate clearly are short-term synchronous As a present. a that their to ownership with are defined. and They no-code through will teams that recognizing and not documented, be by improved, prioritization priorities work, remote work, tools a to accountability cycle work deeper accountable rely be with solutions limits tracked businesses call on created, strategy, need Leaders are last of ensured. managed where Smartsheet but over undertaken about With messaging Jenny is automated, is and becomes when people’s for to and to There derive asynchronous asynchronously real-time will long-term work, this ability just be enterprises the primarily and work require to continuously dashboards ideally work Ceran time. work suited adaptation apps. communications be from to benefits doing to help hand continue more to that, cannot to more I’m so.

previously is worked from CFO served drive enterprise leadership valuable Jenny to and us CFO veteran. we has closely End our is software productive from him comes announced, she Hearsay as to Smartsheet industry transition Systems helped most to with previously as and and and helping Godbole. to the one. Her to recently She working phase handover an Smartsheet. a to VMware’s to Pete He ensure we I has forward Pete unit. retiring our next I as experience together executive transition growth. of Pete of identify of company our at private scale transition him As will successor. addition high-growth look build to served public plan continued a words. helping business has companies company, a well us to terrific and her new say the played business global ask incoming I’d have makes Pete to like role Computing join our senior believe team into us I’m pleased His models CFO, few geographies a a User having to products, team.

Pete Godbole

in a work The is to effectively excited TAM to of collaboration, Thank value that a that you, to creates heights by to future Smartsheet’s to I’m sheer year leading automation. I’m in. been and outreach proposition This is good value the and in it workflow changes this dig I’m is has growing permanent working, and this really to Smartsheet’s the new incredible. accelerating help seen be the Smartsheet the success. pandemic, here and has of Mark. Past a play pleased in clear going that of collaboration the is to and reach be energized confluence of opportunity content. chance scale to and proposition doing business large efficiently. market. I’m of The XXXX transition hands. role essence remote excited

passion and much as the them my been with that As conversations, culturally I and performance, I the in and a this authenticity earliest a itself, for find hunger start. aligned incredibly drives I’ve deal. solving felt problems, opportunity accountability from from team. to the impressed be now I’m working more all a to honored part to lead a and forward but disrupted look evolving of this I’m winning closely and come, market. Truly, ahead for in of to with for the opportunities Much grateful you call. customer

Mark Mader

over Thank with that, additional turn the provide to to details And financial you, call our Jenny Pete. on Jenny? let me results.

Jennifer Ceran

in last from Welcome, and everyone. and reflected year-over-year, were and results $XXX.X million, we for XX% versus SMB which Overall, customers, Revenue up the up stabilization quarter, you, Thank in Mark. with were pleased the welcome, sector. billings strength $XX.X year. mid-market Pete, came at the and enterprise million, XX%

operating in $X.X million outflow last came completed and the in We loss remain increased Our $XX Non-GAAP capitalized year. the the and continue was dollar-based domain million, quarter net free of versus average $XXX no with the the quarter. and respectively. and million and net at balance ACV well retention to acquired on our acquisition rate XXX% XX% end using at sheet Brandfolder debt million of $XXX of approximately cash cash

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

XX%. services original $X.X million. The XX% representing revenue contribution third the growth million, Brandfolder quarter was in $XX.X in and representing revenue As our $X already year-over-year total revenue exceeding was mentioned, growth year-over-year of million, quarter revenue million, to Subscription was third came of at $XX.X expectations.

billings. to Turning

businesses Third our quarter normal saw Brandfolder mid-market and range and big billings million pleased expand the In customers, from $X.X came we see had a of guidance enterprise our above in a in number from number business were the larger among as deferred half $X.X of We contributed as at first $XXX.X improved. year revenue. of contracted million of their and who course million, strength stabilized and again, customers deals. billings, acquired the to also

performance Brandfolder Quarterly, increased remaining of closed about backlog, multi-year our revenue contributed larger semi-annual multi-year deferred X% this deals. obligations, a higher were and value, a of our our total. XX% Additionally, deals, includes also sales year-over-year, of the of billings multi-year which with monthly. team number or represented higher XX% X% as and RPO, and subscription billings quarter, number Approximately annual

XX% us acquisition the contributes year, greater XXX than $XX,XXX now $XXX,XXX than year. Moving year, or of per the total XX,XXX customer XXX segments and cohort, than cohort, per per to and paying more customers now onto more to XX%, reported paying ARR. $XX,XXX These now XX or metrics. greater and more XX% have represent X,XXX paying customers $X,XXX customers or XX We us customers cohort. to The greater Brandfolder the $XXX,XXX $X,XXX

grew $X,XXX. average ACV domain XX% to year-over-year Our

was ‘XX. dollar-based Excluding down dollar-based domain net the of acquisition rounded quarter in third rate Brandfolder, Please to ended full retention the exclude We retention year impact ACV of and $X,XXX. average the The net improved churn XXX%. rate X%. will with the our Brandfolder note, we lap fiscal until of our rate quarter a

the one-year look dollar-based retention early our the of reflect the to continues represents expect in We mid-XXXs in which rate net low- headwinds fourth as the back, rate to quarter COVID. to be a

margin. Turning to gross

margin second was than quarter. percentage XX%, gross the X total lower Our points

centers. approximately costs gross X data decline overall cloud. our our by of margin margin down our for primarily quarter The these by impact wind costs prior percentage versus quarter, we we platform completed the was This reduced the points. the driven public migration incurred legacy in of the to The

in centers data the our with percentage quarter the complete. of We expect exit now points recoup to fourth the X

Moving year expense the by ENGAGE lower virtual percentage increase higher the compared lower ago investments, virtual and to to percentage a quarter was XX to our than to quarter operating by prior of Conference driven expenses. and the marketing XX%, percentage and Conference. ENGAGE quarter was X revenue and lower than our improvement while Sales including marketing increased investments the as was travel point marketing ago expenses, compared The points primarily last year primarily driven approximately quarter.

spend to and expect reps year As and marketing we revenue percentage the ongoing a was of as fourth higher than revenue Research we in of our points quarter. XX%, invest lower more percentage percentage a hire X in development as a quarter. percentage than sales points to plan and increase X ago prior and the marketing,

was while XX%, As products engineering we on expense invest $XX as negative make as and continue to earlier, Mark efficiencies. General $X.X the percentage operating in make was our to loss efforts. continue and driving of SOCs highlighted in million and was cash flow investments million. our progress revenue long-term quarter we free administrative Overall, a in remediation

Our of The personnel marketing spend. represented improvement driven investments guidance was of our relative expenses other by expenses. beat, to in our and XX% operating timing the and significant our revenue loss total

move on guidance. to me Let

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

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

million to and QX million billings. $X contribute QX to expect $X.X Brandfolder to revenue We about

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

be for million to negative negative $XX between flow year. and $XX cash free million the expect fiscal full We

Smartsheet this to CFO, operator Pete sell-side had for time grateful. analysts, to to addition all the Operator? Godbole and questions. and shares welcome passion exciting our four the to you’ve and the this to be that, to thank and business transition. in process it for turn operator a for Mark next know for Smartsheet opportunity like we to getting and I He I interview team again the Thanks Before building the opportunity. now get the fantastic to the it over questions, begin I wonderful over years you, as business and will for of to truly would business spent I as entire will and a the investors I’ve our together. my Pete turn know team. our With am the also

Operator

question line from Canaccord. first Instructions] [Operator David Your comes of from a Hynes

David Hynes

kind seen having any that Mark, of change, I deployments way most ask in or that of maybe both. automation? want cases towards has And have any of accelerated to percent the more flavors project automation realize versus lean if of us, But you've collaboration. your in workflow COVID interest use management kind of I'm wondering of if I most

Mark Mader

it central part I to common have as and think the it now of more conversation. is

now can of and say we alive it is tip But haven't though, business terms in sort that the say, of for less that originating really is dimension, change I would the terms being on really the it a people yet. well. the participate still us opportunities concept, project conversation, of spear the in theme and introducing I recognizing specifically would of In that actually I the this. say in of fundamental more fluent it's seen program units being new spear, and would tip

David Hynes

do But retention Jenny, dollar if the think just Okay. caught net wasn't the neater quick And numbers. follow a in in this on up sure seen I quarter? we've you I the comment. then,

Jennifer Ceran

on in call expect I for XXXs QX. as the be the to the to mid rate, we low So retention net mentioned dollar

quarter look to a understand have back. you So is our dollar four that rate net retention

that. opportunity but still for So headwinds, stabilization beyond we do we have see an COVID

Operator

Securities. line from Tillman question next of Terry Truist comes from Your

Terry Tillman

question, miss Jenny, saying hi. I'm Mark to welcome. that? with Were the X.X it this right. and the Pete, and in million period though, got want I billings guidance Brandfolder I or the Jenny, then on to quarter contribution you. And first I guess for sub just the is and was sure I of that make going is congratulations Gene, off you

Jennifer Ceran

on that. off You're

revenue. was million X.X So

top-line we when So billings million core $X.X that's both $X.X to we deferred that's showed think what the you include of revenue. and on what billings the I the business on million million number. revenue, $X.X contributed

million on $X.X million revenue. on billings, So $X.X

Terry Tillman

you guess, you're you here And Mark, I garnering and And of we large maybe are all with becoming features, much Collaborative I'm you've And in record update market on for of on attention system and C-level do this how Where Smartsheet Work C-level have be just category now? I that, have just heard as about maybe going branding UI, a don't been the Thank terms you big the guys question craft you deals really overall new Management, deals, Why exposure. quick side picture a that? just kind discoverability now many what like really from an of, billion this, helping you. leader. use of how and executives? the dollar working-on for

Mark Mader

answer would we I the $X in just on the the an did quarter. Terry. question see the say of increase million to two Thanks, customers,

threshold, as The while don't and and we XXX people that encouraged though, I CIOs Well, a XXX,XXX more wanting out And from stack, the Jean accounts systems, on that yield by report we the existing we talk of million. relevant conversations are have of And XX,XXX ago. around their I report with more no-code accounts on the around conversation, north app nicely. to what conversation. that that how just building. around for terms growing stable were is growing yesterday wasn't conversation now deriving integration stable years think with happening are strategies talking do the enterprise two metric think I'm their of is automation, is half talking WorkApps themes in thing of of north is X.X I are

suited those So are inviting conversations think I think conversation the things doing much more have well were that I now. we're to

Operator

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

Melissa Dunn

questions. Stan. This on so Dunn my for is taking for Melissa Thank much you

The is first I have one on federal your the around business. commentary

you've high there. sounds your expectations your it there. give track color you expectations How how of for this does a can this that going segment going meaningful around have lot So like in to been the any And watermark doing of work your a federal Or percentage be And presence can super quarter? forward? a big you helpful? on how can be forward be versus

Mark Mader

over year its in billion $X our a I million contributor. we've In is in doing, we're the overall at our area there. seeing quarter-on-quarter looking performance look when terms nice really on terms be part in experimenting our looking think of what of four to I as of I our frame with we're to next low-single-digits And set it's of what we reps contribution improvement. for customers of material business, But at three terms year. going for we're that are adoption say, productivity and would the not look making in huge remarks influence business, yet still that we're Smartsheet a

So some really a as about none. talk on year horizon at it. component. in guidance three QX, nice this more this going we’re being a But time, we we at look remarks to When have on

Melissa Dunn

a And just quick then follow up.

might bit the necessarily are keep see trending cash mind coming a there Doesn't little improvement in why those margins in be the don't anything things to guidance. Is on -- operating differently? flow there really on I same well. free So

Jennifer Ceran

positive We really you mention over will in flow how up to to time. did saw accrue our recognized do from relative and Yes, collections, with those be QX your we it revenue and and how has gets free so QX. catching cash then what payments on

Operator

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

Ittai Kidron

with great you And working Thanks new role. for thank your it’s been your Jenny, luck in and also you. much service, so good

You've some great. But me. big got sure for A to I'm you'll questions fill. of shoes do just couple

like about contribution First million did one you on year. Brandfolder, start, you correct, in Jenny talked good Looks clearly very I'm $X revenue for originally -- if quarter. almost on the that the

think So effectively? much itself of monetize was there you've kind that about contribution to momentum already able help sales to forward by being very of carried the me see Smartsheet versus Brandfolder how started

Gene Farrell

I'll it’s Well, Gene. is own. Brandfolder one, this take on That XXX% contribution its

sharing standalone really can some kind believe in co-selling, we of it put of the our to but makes have just Brandfolder sense, business. where be significant lead a really of We started and motions, element place

Ittai Kidron

productivity mind talked the the following maybe Is expansion I way. they've there do the And quite as right I linearity year's three rates? then of year? haven't could about job general keep last heading talk as How months. for in you listings, about, for and Mark like the us you I've about you'd been And to clearly know two, And next over a in substantially outlook. framework think far hiring increased your growth

Mark Mader

-- think were we that investments COVID we I at the we committed as half, to keeping in on our headwind first point. looked happened the

dimension, of produce this and that more a So, enter program year. quota team next group dimension. we a year more, both reps people year think expect did with was carry and than I they next who actually and on suited produce members And other well to we're can to a

massive huge to our So, we don't current year. the now support to this for have do plans hiring need next right

we’re I that front. positioned So think on well

what this we look a both to towards I at And at and look of right, a still growth. is is aware like top-line XX we growth, of say business, posture would we growing as growth be investment, think Rule bias at objective company aspects, much we our in with minded. I our look a very being the notion

Operator

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

Your line is open.

Arjun Bhatia

total prospects? it for we And maybe or dig a quarters that free us, just pay, to matter seems if whether your you're long-term add should takes at excess base, should about time Maybe just look thinking X we When can level users we impacts growth your you the deeper, -- typically think it users maybe first for to that? be a convert that it's think years, about to this million we Mark, of of that in how we those how platform on collaborator to year. in pace how one tell that

Mark Mader

be tailored our that's for really had And new model, past, these to simple which at mechanisms with allowing is no customers to traders with of build collaborators. engaged In engaging much but a low free we're more the And users. going at very is cost. year next pay think we've quite commencement of for I announcement which us. these the WorkApps free, experiences, additional is providing people the that they longer something very come are conference, and our a

get allow to solution actually some these benefit paid really you the value experiences, for we getting but So, elite the enterprises of deliver. we of create

off starting on just So, it. we're

over WorkApps companies We X,XXX previewing today. have

product. which So, I that from to was year, was releasing the next we at look that we into as say ENGAGE would great in successful formally And dimension, impact see. head

Arjun Bhatia

Got that if about great created to for the layering How it. work some organic and one motion, is -- to maybe maybe -- Brandfolder. some go-to-market in much little still touch Brandfolder outreach solutions the solutions sell be land a thing you then marketing and thinking very self-serve, same and you’ve the or more does marketing department And can those the I top-down? of bit should on and you're sell try that there we that you've to now allow done CMOs direct do expand that

Mark Mader

I going some seen a coming are really self-directed be that going in balanced not grounded more nice think the uptick it's business We've forward. actually much a leads trial. in to into

when someone bunch a a hard some -- you we've self-directed on the to to you results basis. it what trial. invite are So, opposed delivered a when value over the a of some of into articulate learn seen gives mechanisms which we've chance last maybe the to year. And And conversation you somebody interesting of a done as testing is actually allow

that top-down solution preferences, there I get in both itself does both, I think orientation think too. to learned to doesn't you mean solution lend So, types well the that exist. the we've abandoning set the do having investments making of self-directed, think by right? address and past year We're that two really we're and But I

Operator

question Stephens of next comes MacWilliams the from Your from Inc. line Ryan

Your line open. is

Ryan MacWilliams

guys. for Hey the Thanks taking question.

XX,XXX customers in ARR So, from the additions quarter. over strong contributing in

through for enterprises noticed customers year? have compared process, going how Smartsheet As expansion differences to larger their these are start approaching budgeting last to their larger you any plans

Mark Mader

reduce their is, yield subscription of on is, our it a cost that my what is we my of from outflows? be can is continue they dimension, we as One of solution? more the And they're one the of be where whether the really deploy welcoming they to the investments? And them think application collaboration the also what at dollar some we I second to how maybe the looking topics areas. spend in derive impacting. budget content can the automation are have, other Both areas are notion offerings at dimension, investment. they're two So of dimension, look

well continued that of our on I the really front So, competing velocity to savings I solutions. solutions, think and the focus think lends on versus dexterity

Ryan MacWilliams

on just the growth How new see who then we cohorts. back about composition how and of were were trying there? to these they these Just or And added previously added to expansion? their dip think below came to these customers guideposts who customers how Great. maybe growth Thanks. should see

Jennifer Ceran

repeat quite you understand it? question. your I Can didn't

Ryan MacWilliams

Sure.

may contributed the ARR, how Just that within those below XX,XXX saw for the growth the quarter? in than new customers and they segments you quarters, contribute customer this previous that that be dip then previously did greater to

Mark Mader

think evidence the I were immaterial. were in was gotten of numbers, heavily These terms not. customers to under -- anecdotal It what Yes. it’s was in were there impact again we pleased are But them. meaningful who of see, legs sea -- who have they impacted, their some

Operator

& line the next Your from from Company. comes of Berg Scott question Needham

open. is line Your

Scott Berg

real you today? the acquired, think helping of all acquisition the of sizable of good get you within competitor Hi, with which you to I Jenny, what guess a on working good was Peter vendor. a yours everyone. echo management quarter. as at and you do trying terms had work forward I first the certainly Congrats well. validate What actually to the And look are to a space least in quarter, accomplish space word, Mark, large luck, would collaborative the in means that

Mark Mader

it does. think I Yes,

I think when portfolio. you see a large cap really take note, and look diverse to expand their

it's think I notable.

that I them of a think bit is sale. we highlighting self-directed different is consultative and I category. obviously It motion. deployment. is there land about a expand acquisition fairly and also no it solutions truly that, asset, a versus But simply worth a services-driven sale and there have is little sort related in purely talking a do it it's of a think, The consultative they're just

enterprises So, I types demand is it shows within think that for solutions. of these there

work and provider articulated, are to Adobe tens thousands look our we we've continuing cohesive customers. any of serving think we your with that yes, forward enterprise. marketing the being fundamental As to And, to to of organizations

Scott Berg

year back it. of which Got perspective, leave When on a you look innovation here follow-up pieces was the then a call, you out great what's the that ENGAGE, Helpful. And business from least. of item or you Gene, I the a two, the out at in all of can’t the think do thought near-term? just most that'll in came one Smartsheet out pace, be impactful at

Gene Farrell

the that that's the before, tough think actually Scott, had I little I've is I one. kids, it would WorkApps. has transform Well, a like picking but your you, most to really one one opportunity a this bit tell is

together bring together creates feedback we just really seeing -- it just completely bring positive. And and in and our us has And a Brandfolder capabilities gives it the it all acquired, the think been different exceptionally that to assets that users. other or capabilities a Smartsheet. I experience. to deliver XX,XXXft whether way be cohesive customer That frame of the they already this, of we're because and

right, our I saying of lot really seeding days, got the really business. has it's for still the it we potential and Now most preview in but a do, work that probably getting to in it we're market, a into transformative think still GA still be early very to and

Operator

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

Keith Bachman

to going are related. since concurrently questions two was ask they I

your retention rate is, mentioned, FY first hoping shakes QX. think was I in net do you for through to on In [Audio know a the and little to I rate? that get retention out Jenny context Gap]. expectations you're it question broader words, But out that The other you 'XX. just extend Where net

Aaron Turner

still you there? Keith

Keith Bachman

Yes, hear can me? you

Jennifer Ceran

You dropped minute. for a

in FY You said, shake it 'XX. where does out

Keith Bachman

I do still that by around and revenues? headwind what say is the and economic is, of think there your be impact climate we the and COVID is, about hear the that you 'XX? assuming that's that the for And just should low any ask that's me an And other the in Is you QX? there you I'm of FY top-line recedes of economic how I'm course could relief part And guideposts steady on little us kind can it thinking context Smartsheet? that whatnot, both on give that question, as a still -- in question. still In 'XX? rate? Yes. exhibited to Does hopefully, could you be current I growth a assuming is want your feel COVID top-line heard a asking about like that words, those mean 'XX And there's questions. during And second at my of you bit

Jennifer Ceran

Yes, I did.

won't larger in sure could on make that up doing, contract, I back to next come that So and just QX to the -- rate, QX, not because we see to customers we're see year. do But with now. customers QX fact the retention it Pete going metrics, I guiding We're accountable the did just year, on for delivers potentially here. be year. who planning that next we're where stabilize based want be And a he deals some next next does year QX. respect But in guidance we're and guiding right to go in process scenario for Pete held I the our for currently net here. And to the will do be is it.

Operator

Thill from from comes question next Brent line Jefferies. Our the of

Unidentified Analyst

see the easier question. or early for to scale Are earlier formalized it Or that? on Joe it for enterprise making a still and to agreements strong up license is Thanks process to follow wanted up This question. customers And improving Ryan's on congrats agreement too I starting Brent. results. for for the to ask a quickly? you just contractual

Mark Mader

often that's Yes, to Very the place core expand can simplify ago I think put predicated as or by enabled Smartsheet we've really organization. with as being an years on four three allowed approved way early which in and in mechanisms IT. us which

security to are we those review, say more into as their us contribution within So presents the a layers. IT, we enabled becoming really it ARR provisioning will I higher we the and for would do unit be trend business identifies then frequent, degree which it, we environment. go these to get that through believe go

is we also but piece there, other The the lock decision customers. the of on just the while and not largest the people early that in making are for commitment of from commitment. multiyear it's a type approve where enable side, to And multiyear are signs on seeing

Unidentified Analyst

flow just any out Gene in product Great requests, customer follows anything And conversation, you typically ENGAGE requests your guess, a keep of to common the or out? I portfolio stick given the of surprised to then hear. or vertical

Gene Farrell

say really that know response that was I I Well, I the we with said I if made. surprised. really would announcements say was satisfied positive don't from I actually would the more we -- got

cases and uptake marketing, the well that can has customers things really portfolio within that encouraging. some has in marketing seen we've early fair management other formulas the the response of of can announced, big we that number can that we're to and getting then all large displacements, support Some the a for core all have I out been of because elements like and competitive really the tell Really number of something offerings marketing are a And the product column organization part And looking be a a from of what been baselines, of you like would was to things. on silo solutions received. deals business. that break parts of of

really big would other super I early. like the of some been So it’s WorkApps, that's still On gratifying. say announcements,

on to of we more until going we're those get signal. kind So hold

Operator

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

Walter Pritchard

in what beyond other around sort you're area end, incremental in it my of way? of no-code, intersects sort this see an conversations, How at code. that looking low a tangential you driver? you question around My pretty of just evolve do when those on fast sort yours? customers Probably is platforms see in demand understanding And

Gene Farrell

not those But would had would like, as early types number increasing had before, of preview. I to And business, able increasing an in their of mentioned days, number really manage Yes, IT recognition have discussion. in IT, years. still is really Walter continue an to to conversations the XX it’s still and they're the say build -- deep appropriate be to are to we've with own. do where with on tell guardrails be going hungry deploy able conversations to we've that where we're I I it's driving of that, platforms, and that that with They users you there's empower they last their solutions some

would clear knowledge say their worker, built could that when other technically I lot one Apps. is that to deploy empower looking of I numbers, greater of gives needs don't what just for. positioned to same that savvy still very what And And landscape, on Work in is they're that's built serve competitive the optimism And I the analyst platforms workers. really I of the clarity broad or about we're in the more of relatively look Because average say, so small And what solution they're their that staff. and a but well part they signal seeing knowledge things we've the member of around many I a solution me about space. believe a know base not increasing of at business the we that

Walter Pritchard

retention Jenny for one quick on the just net then -- have the bottoming. And rate asked people on Great.

the turned so corner continue think it you there's of risk churn contracting trend there in customers on here that and see get some of that away you'll could you QX of better? Do QX? forth, to Or with I the that, and forth. larger that this so it mean, you in quarter. with do you Just expect

Jennifer Ceran

the X%, may trend but I continue. though, down, trend It don't continue. why any reason below reason wouldn’t the of wouldn’t see no not there's why go rounding terms in

Operator

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

open. is line Your

Rishi Jaluria

with it's and taking everyone, the you thanks Jenny my Two working pleasure been all questions. much questions. And best. a Hi, so for

math the on little quarter. acceleration about more basis. an billings, talking the next wanted guidance number guidance, I do midpoint more organic to for billings at in next an ask First, you're If bit importantly, about of the a we this And quarter quarter. again, the

in both cases, So Brandfolder. excluding

a giving get the an sense environment we're follow-up. you to acceleration seeing pipeline a want quarter? current got in Just organic what's to in I've the to to next given guide Then confidence the billings --

Jennifer Ceran

Sure.

So, at pipeline we this we're look of number quarter, in seeing. we have and Mark strength And saw larger about the of nice the that both I pipeline, deals really talked a big we When larger deals. enterprise.

that I things, we And us gave confidence the and of those fourth so guide think, for decent had quarter. all

Rishi Jaluria

you on for higher that? transparency. ACV. very if give we disclosures deployments the is just really function a about to It's Smartsheet can than the Brandfolder, why as way, then -- a us. us more in is at actually And very, that, of wise, Brandfolder. leading for core the appreciate think the And terms by helpful pricing and customers, sense ACV you all have a see it it’s wondering larger I'm of for surprised their what’s little But to

Gene Farrell

it's way a proposition, would I'll the add-ons capability. solution because a we Brandfolder premium deploy. there platform based to on are like top have that additional capability core is base and more I that Brandfolder. different say that say, Yes, capability It of solution. is a take it And tiers offerings you of I it's think within of one, And not really user would -- think that about

a do Smartsheet. typical we at of point sale. price believe type Also So, base. to a But existing just than does expand said different higher it there's being fundamentally, land opportunity that within it's

Operator

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

open. Your is line

Unidentified Analyst

[Ping question on This of WorkApps. behalf one is Lim] on Mark, just Mark.

the us Bridge about on aggregate four something the help to from Bridge understand, with is maybe WorkApps and an maybe today? three alleviate seems can on and basis talked what to Help And And more? you have WorkApps churn what vision, new. even expect customers build now? years example You WorkApps last maybe an time, do

Mark Mader

Yes.

WorkApps. I think, let me start with

essential One they to do. ability things is the participant solutions of that Work what the supposed Collaborative Management for the to are in understand is

company share little report here's follow a is these instructions asking to actually the intentional across and presentation you And company. person sheet, in a or and capabilities. let's collaborative you're these or to participate. someone to create you forget, our within What if situations in your approach, you it, on you're your are a say, WorkApps current not allow these dashboard burden your -- just a forum, on guidebook do here So, is either very how placing to of do

a into application you for all and So, to intake you one it a dashboard presents an and log a form place. in report, and

see. of There's no So things you within environment. person it's a other things it's that that unified, distraction a to from want collection

One you when the enterprise should to access, invite capability. not level benefits someone same very real an it’s of is, like of a have though application everyone the that, important

to to You of the have see director have might the the XX% see the see see want want CFO want the might assets, assets, contributor their all of to program XX% may you assets. to you

a and solution composite bundle, that thing. share that So, in very, to the is ability it create important manner, simply secure a very that

about a very it think what secure as last present someone to again, is building this So the enroll off. it pull really in interface spent unify is that cohesive, in not we've decade And and people. This artifacts the to being to want code allowing able identify a they straightforward slinging to manner.

that big So, it is that to a base. to impact reach user very out

to very principally to thing one allows systems simply people the Jira tailored and or users not to is are like different interactions by a past, It orchestration is we've enabling over touchpoints. it Salesforce service people about participate different external for proposition. Bridge opens It's The sales being is our which to done Atlassian, Bridge the Bridge that application. this at platform. with in more things and between not new enabling portfolio value is core and ServiceNow, to to about think is Smartsheet workflows And orchestrate do and us up systems. consumed I integrating cloud collaborators. Smartsheet their who understand of

more with on to WorkApps you benefit Bridge is and do our allow platform. real parties other third The

XXX about huge we our think allow for partners being partner now, we at next customers partner plus a when is company frame. enablement opportunity the advise on the to So, win solutions worldwide year a three roughly think over and to

as So, not the customers, and this, just empowering and about it's engineer I empowering it's partner our Gene community. talk

Unidentified Analyst

percentage give housekeeping. understand of Super that. Thank Did the mix the And you capability as based helpful a to subscription one you. revenue? of Jenny, just offering

Jennifer Ceran

you. to it give can I

So, XX% it's is licenses XX% seat then and is capabilities.

Operator

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

line Your is open.

Unidentified Analyst

Good afternoon. my Turrin. Michael taking on is Alan This for Thanks from question.

APAC, from one for want and could level ENGAGE, I forward? about me. international to one an Just any standpoint, I wondering excited call high talk you'd but in if most the going other opportunities out Along you for, you follow-up hosting regions that want was to about? there that with on are EMEA

Mark Mader

regional marketing want geos. two of I headquartered the those identify to in of really very solution. those how reinforcing partly that sales think form Europe we pursue. other next will and Asia-Pac deliver in go-to-market And out in from focused comes that conferences year this we we be saw Continental But our in we next region, UK and the and good from of form I Sydney, think capacity, on partly remain the our regions. the starting those a markets engagement year, to We

model, have gives that from for it to moved in-market Now our solution deployment standpoint. delivery a for we going AWS us optionality really

next to it as say bigger us probably would that'll I be one relates moves the year of international. So for

Operator

the Your Knoblauch next line from Capital Brett of from comes Berenberg question Markets.

Brett Knoblauch

and user like as a organically? many you congrats base And users not working the maybe could to that you strong. came Jenny, a forward count. said to you. from growth up, you, First, RPO's maybe it's then very follow And say, model. with just luck, Can good Brandfolder? total XX% is I and out just you was best update break look Pete just user wondering how try I’d I wishes if know

Jennifer Ceran

to answer you the question? So want Brandfolder

Mark Mader

is that count gave out not we inclusive users. Brandfolder user of The

organic Smartsheet. So that would be

Brett Knoblauch

on RPO just growth? then And

Jennifer Ceran

is down RPO, growth, So from long-term. in can -- prior XX% And XXX out XX% million, you between that of and the recognized I to which RPO break tell next on months. will have the quarter. well, don't be short-term within the so is that I is XX What of

Brett Knoblauch

I from RPO quarter? was how asking last from came growth standpoint, much organic an

Jennifer Ceran

Yes.

you would Brandfolder. million So roughly out take for X.X

Operator

turn I'll no the are at time. There over Aaron Mr. to this back further Turner. questions call

Aaron Turner

joining Happy Great. quarter. Well, holidays next you this and with thanks for speak we'll us quarter. again

Operator

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

You may now disconnect.

Smartsheet (SMAR) 7 Dec 202021 Q3 Earnings call transcript