SMAR - Earnings call transcript Q4 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Smartsheet's Fourth 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. [Operator Instructions] I would now like to hand the conference over to your speaker today, Aaron Turner, Head of Investor Relations. you. Thank sir. ahead, go Please

Aaron Turner

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

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

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

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

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

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

Mark Mader

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

than launched It quarter of and with X.X users, to value ARR over QX or companies up which in performance within up QX no-code of last $XXX,XXX a users. year-over-year more the year, deals, $X,XXX more achieved base $XX,XXX was users we licensed QX. expansion million are pleased strong their in $XX,XXX by XXX in than or saw and in and from by XX results large our our In Smartsheet XX revenue QX in saw over XX ARR We contract from with our $XXX.X grew XXX billings. million $XXX.X ACV included including their by million up exceed domain and QX, XX% from annual our increased Work Apps increased recurring ARR our their more increasing a million from XXX X in community revenue annualized acquired brand, offering than of average success

results customers the by fueled the dedication team, our of Our our and QX derived were from platform. partners value

conditions, customers like ARR cloud the people's Level which and on mechanism. Impact change continuity to the helps work centerpiece rapidly of This January growth and and as on wide proven has acquiring distributed Smartsheet Fox new to period value, respond Syngenta of Work State to Smartsheet of array even last data year to Department the the Australia, XXX% was a more on While to Washington, opportunity Smartsheet to of the built reality. adapt UK how opportunities opportunities scaling capacity focused employee new the completing customers to and channel progress. would in achieving so they customers of and at highly exceeding has that partners, the Key as at this of every year to XXX number benefits our of COVID the year $XXX,XXX organizational in as a agility the increasing our proved year. After using demonstrated Roche been them think the over employee the adjustment highlights enable a in meaningful migration well health who able platform made the change teams, Apps that transactions even shift centers secular Driving companies tools apps for Last Defense last seem to their navigate like and X,XXX organizations settings. a differently global capable rely core Smartsheet, a initial business greater National core unexpected, the workloads operate them events major individuals changing and the compelled was modernize investments Health content Authorization, recognize realize now many to solidify and Sports X a in be no-code and over scale establishing shine normal where meaningful digital need software ARR they cloud, XXXX enterprise international with to footprint testing safety, served, Brandfolder of Service in understand were our that the of include to about through need of far, to industry the achieving XXX and created macro the to and for public light trait platform they manage management From offering, launching component to their has a serve on year pandemic. organizations we federal XX,XXX transformation. meaningful year-over-year has an have safety solve that were their company's to missions. in largest of as to Smartsheet to Provisional customers connect stack. And organizations an in Customers placed a work Smartsheet's pressure deeply distributed a to quick-to-configure were building

time at when meaningful the change. world Our to mission change anyone a to to continues rapid undergo empower is drive

are often problem closest directional of Our platform role lifting invites change some systems engaged to the in the agent Historically transformation systems of the in workflows critical to the solutioner, other center more has continuous more through IT to cultivates but the organizations the be is at customers allows support To the well and teams this engagement. is edge platform. signal in developing driving Smartsheet committed To that enables contributing challenge, ways, from to top-down, customer mission-critical do improvements step flexible improvement Smartsheet creator. initiatives. effective ability growing to is the of bi-directionally. continuous from work, as or in that our meaningful as requestor innovation end, the and our from and way drives scale work. future one equity been in for this valued a and meeting we connect and this to observer backend critical to that to those a large indicates business to

delivering investments. an continuing from are in ecosystem greater net which investments our the platform enterprise-grade to to to their connects value We it and cloud organizations enable drive

capital deepen support the workflows. our last HCM, can this robotic Salesforce, partnerships or Adobe, Microsoft, among means with integrations our across to move new others, In quarter, RPA so with chain. achieve strategic automated investments alignments more human document the or we management organizations and process and value expanded Specifically, cases, Google, faster including additional automation use AWS and and

integrated track HCM the by Workday customers can Dell related to from create work workflows automated X Customers HCM and workflows on six million the over use months Smartsheet dynamic talent tasks days. has over deploy past Boomi, Smartsheet progress, and Year-over-year automate to needs. to growth automated with the integration Workday grow their With XX in rapidly. actions to continues last been XXX% processed execute

part are that to automating for dynamic lease common job managed our document and easier our document the recently builder highlight use Smartsheet integration accuracy including and Customers increases consistently scale. RPA. and Document management. lease hearing agreements, onboarding, UiPath, creation are use many process the making of cases customers are for more Last automate tracking interactions as signature a workflows, employee signature cases at of We it management with Smartsheet we Through to offers in our project ability workflows customers enable week, workflows in of like builder. with challenges to partnership like the even desire document Smartsheet enhanced the structured and also announced from customers DocuSign with invoices. around for we also automates connect executing

document has customers days, builder over to helped XX past documents. the generate XXX,XXX Over

I'd that like our provided proud to the moment. Beyond and customers. about am benefits are high-impact to our UiPath customers, each DocuSign of talk mutual for Workday Smartsheet also HCM, a strategy solutions brands, I also these

disruptive to further. of cases. solutions In our support processes indicated launching and that solid to capability provide customers A our PPM Smartsheet customers streamline how sports capability-based marketers feet, scalable marketing is projects to differentiated solutions management, other a and with Brandfolder's will content of marketing has customers Starting their of strategy recent management technology the use suite chosen project and content the greater capabilities proofing to we measure production, of for that traction, desire enable be offering analytics resource strength content Smartsheet combines achieve used this, configure establish asset Accelerator even has management, address reinvigorating creators. resources, of the and benefit a strategy, use of phase results. full The content few combined of content deliver management, library management Over solution Smartsheet’s Smartsheet offerings signal and Overtime speed of deliver set solutions and network, for properties increase management, win agility their Smartsheet Sports, and take ROI levels unique These of resource portfolio and Accelerator with track marketing capabilities project higher these the XX,XXX our Overtime even cases. the can the like capabilities last tools provided next customer a marketing. and workflows. and With targeted and years, that customer are and determine for support helped vendor. digital for strategies. and challenges. no a of a combined marketing platform, to analytics proofing marketing demonstrates tackle

XXXX, form refined as user In function. is a for multi-phase experience. is experience features user Beyond to and investment customers a customers. more a capabilities, deliver our important new with design will beautiful achieve we This help as

productivity coming year, redesigned will phase customers with three launches The through used has month. XX,XXX customer experiences. annual we and to by goal to digital gains, meaningful to will conference is engaged In provide will education, different next XXXX, the lead experience to ENGAGE resuming the benefits, throughout the events been to beta points multiple users significant realized. We events In do touch ROI of ladder deemed for in customers take in-person closing, continue a up when virtual and virtual support delighted over organizations shifting connection that with year. our our are where connections and employees, safe a form, globally opportunities opportunities look In of first distinct provide forward all so. transformation the the

the I realize month, latest core opportunity what's an As there started group new future. of are offering, like has with in team, the capable leading looking improved possible, year With team XX last been shared and of XX solutions years the forward more Smartsheet ahead. most and importantly, members new who never Smartsheet, to at we a who customers

let to provide the results. on Pete? call Pete over turn our additional to me Now financial details

Pete Godbole

results fiscal were year and and basis reflected volume. and posted in of to financial call. trends quarter, are before pleased XXXX. the are GAAP a which I otherwise non-GAAP on stated, business we to that results with will Overall, results Mark. deal through Unless and you, all results the improving for for the the release now large continuation our go and our QX the reconciled Thank presentation was expenses our operating earnings references

of close headwinds strong results and by year, QX customer Our transactions fiscal organization to an earlier easing impacted were in continued COVID-related supported a strength year-end by the by we budget saw our of sales positively larger the year-end sales was that a benefit.

cash $XX.X up $XXX.X $XXX.X $XX annual For million. flow XX% million, year-over-year; of of with free billings the million our $XXX ended year-over-year; with recurring ended full-year operating of year up we of negative total million, XX% revenue loss approximately of XXXX, We revenue and million.

provide more quarter our will color I Next financial on fourth results.

was Services Brandfolder $XXX.X at the previously year-over-year. $X.X total million, in of our was first million, and year-over-year revenue year-over-year Subscription fourth it the the quarter $X to million $XXX.X for The time up XX%. mark cross revenue to was growth As mentioned, accelerating revenue XX% fourth growth XX%. representing revenue quarter came $XXX in million exceeding expectations. million, contribution

Brandfolder in with $XXX.X Now turning which quarter of to our multi-year an semi-annual to total. X% monthly. our in contributed billings Quarterly, which growth number, billings also came subscription XX%. Approximately X% acceleration XX% rate was Fourth were of guidance. represented strong annual million and exceeded $X.X billings. the the our billings at billings year-over-year million, to

customers us of $XXX,XXX year. on reported These or paying year, our total now $X,XXX metrics. $XX,XXX We now and year Moving X,XXX per per now and more paying ARR. more paying XX%, or to or respectively have segments represent XX,XXX customer XX% more per XXX XX% us

Our ended the year-over-year $X,XXX. retention to We X%. quarter improved of is churn rate domain a average ACV XXX%. XX% The net grew now dollar-based full with rate and below

in our year, the coming You while dollar-based is both impact line of notice customers quarter our retention new of than higher from with may retention would net greater guidance, our to came this rate. past dollar-based expectations. billings rate over that expansion This our and QX was which our customers that acquired we billings neither our number of a proportion due net in

from fiscal quarter, with with this XXX% lapped rate over on to first provide investment greater the had a the ARR of quarter. over This For our approximately trend broad large year this X,XXX do, defined of $X.X which segment dollar-based ARR a Smartsheet total XX,XXX like around COVID-impacted $XXX,XXX moderately ARR this This rate to XX for selection which current employees. of XX of additional that revenue than potential. dollar-based billion. to I'd the in year had customer remain our ARR we retention in which ago. remainder customer platform be an we of in higher. customers our progress total expect the $XXX,XXX customer Through cohort as represents a up expect level offerings. our of with segment, the encompasses our we segment – net recurring If to color significant At the the we $XXX,XXX net ability domains first we retention expansion to represents customer XXXX, level, the a have shown expanded we year, the large we annual segment remaining would as opportunity an end quarter around

segment than all strategy $X,XXX expansion this and segment also these is year. seen starts expansion. exhibits in segments with as adoption This ARR This greater less where of than in subsequent Our customers higher rates. across XX% well, first of organic had a their

population. XXX% over-XX,XXX-employee net higher the QX, of of rest As dollar-based for the retention rate than the customer segment customer our was

packaging Additionally, seeing growth in are growth which our significant our products conviction to active continue this customers. segment, invest we supports in user with support further also and and while large we to features,

As we applicability the sizes. Smartsheet with established solution growth of enterprises have companies for as firmly the for broad we opportunity think choice all of ahead, about CWM

we earlier, growth a shown As have ahead. long runway

opportunity, coming providing continue on forward and to will our in our invest We to the I progress in additional look details quarters.

Now to financials. turning back the

percentage X margin third total points the XX%, better was quarter. gross Our than

of The presence costs meant due migration As the repeat QX. migration the public the to with cloud. to server gross completion impacted margin QX in our of adversely duplicative was you’ll duplicative that not associated the QX our in in recall, did costs

all between in fiscal cash our functional has was exceeded for model X% to expectation XX% ago. a generate term, at cash leverage is down cloud $X.X Longer infrastructure Overall, $X.X XX% to we flow million, which positive quarter the at flow negative areas. gross of was operating and XXXX Our loss year-over-year on margin capability significant year This our leveraging XX% built revenue revenue or Free scale. in the million guidance. look was for the from internationally. of as be public

new licensed us our expanded product provide products of ways we on guidance, we had I housekeeping of with offerings our our a end new In the move quick item. year. past, a at to count on the packaging fiscal to each to is to This we have trend include base. and out structures reported Recently, expect user Now more that continue. user monetize before

report on As we does, this ability our in monetize on total increasing user our out each to base. our focusing to continue understate forward, will business, quarter. to community licensed our it will Due going users size evolution

count. on However, licensed we no user out longer will report our

Now let on guidance. to move me

in more in XXXX of This environment that Our the our contemplates guidance back half macro seasonality drives of improvement the year is the towards the second the year. fiscal year. expectation a billings half gradual weighted of

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

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

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

expect We million, to be $XXX range of $XXX representing XX% of in growth to to billings XX%. the million

emphasize to $XX year fiscal loss to cash And XXXX from X% free shares minus weighted be loss in our operating minus $X.XX non-GAAP X% to share $X.XX and approximately expect in improvement between per between closing, relation to X%, expect range be year $XX business. year to in in an we and for a In million the net minus XXXX. the million and our few We outstanding. based of XXX be on I margin would non-GAAP points flow million, fiscal

across from to diversified hundred customer dollars. verticals segments, geographies and with size a has in few dollars business million range Smartsheet several the First, ARRs that

this in spending customer opportunity. solutions, will and grow our invest scale to continue well priorities we with our Second, and

have proprietary past our X of large our with community This moat. incredibly our a rapid to significantly couple over competitive CWM. we model and maintain positions we over fiscal innovation XXXX incredibly years, have million users. powerful position of with widened as the And year execute Third, distribution finally, and in enterprise the well us an features M&A plan in leader our

Now let questions. me it the turn back Operator? operator for to

Operator

comes William first Blair. the Instructions] Thank of from you. line [Operator from Your Arjun Bhatia question

open. is line Your

Arjun Bhatia

changes you Hi. on year. just you. and of Thank the one probably solution your the great you I prepared a little we congrats first the about and end should how us a a pricing for maybe is in can impact quarter this bit to you But evolution Mark, on for and value-based maybe and making are accelerators on that the your bit was what great think remarks a strategy and strategy, – you to solutions for wondering mentioned maybe will how expand if little those other the the some are of have capabilities?

Mark Mader

I as take Arjun, have let Yes. think and I'll this I – so cover Gene we'll of two-parter, I’ll couple answer off. comments, a a

sheets further two we take actually prior specific cases, seeing scale use trying dashboards the for scaling we're And reports things think which and those. the respond in on our customer is I and of when our things set with to do needs. we're solving what developing dimension I accelerators we're did proprietary letting people very think really advantage the a of So composite of IP. our for that this and It we're like is of things forms, control, is, about can our signal. be and But enterprise different is to in years, people

solution. configuration is just So the way It's of beyond technology built. a being

let to a Gene second. that So to I'll speak in

important. that's and pricing, packaging very second piece The around

how with last few simplicity have as in more years we've created ever-growing of the we portfolio and people want more us. Over and capabilities, engage they things, this

needs the to and offer. sales we're simplicity the set able customers and well, sell median our as get in quickly offerings. to well in be to with to enhanced achieving newly And able rep to with us for be what to packaging now let change react that as that's of a this there confidently be to Gene? So

Eugene Farrell

multiple the more precisely signal really Yes. for side, we've the – taken solutions customers capabilities, to able a looking those their area. being for Building a ability based are on they're comments, cases set in it's apply of business functional that really solution they individual use the on on Mark's to shift where licensed looking ability a needs tailor to when and across capabilities that customer

are a and the event to what development, So management in campaign for event will we customers I'd license that able management, and to have hey, set of marketing, and accelerator an goes really content be for list saying, capabilities creative support like management on. is example, marketing

will really connected discount carte a on we've they at of. by our be capabilities or grow la enables package as changes versus a package is And still actual can what platform platform, so we've essentially individual actually have packaging entire of platform. in that or of And able that because offering significant how premium monetize they takes approach to capabilities. And us platform to look customers done friction available that a because buying the value them a new them top individually. premium But the when a to that also positioning priced with then to on now bundle within the we're it license license based or customers be number the build capabilities our to also users we that less premium offering it then a

point that has license department that is a the value so company within commensurate price that it level. a at they a department And at can the with deployed Smartsheet get

the connected a at and users that they As renewal expand customer point. add across price or relicense higher that will more expand then enterprise,

Arjun Bhatia

And from going financial I one share for if we for in you, mentioned a question. be great after little Got team. you you. color. days any the Thank it. the your now, member user disclosure disclosures the expect in change, an know being perspective, would of be early should the then, can seat changes That's then if the very licensed with some a but And XX you maybe Pete, observations a curious as about other of bit of newer Thanks it forward? us open-ended helpful. leadership overall business for But CFO

Pete Godbole

the for thanks question. Arjun,

takeaways by really three flown me. fast. There’s have days XX probably for first So

the is, and you you feel have word TAM, hear it. first actually The to always one

using work that did a actually just product Smartsheet, joined I actually as the was and figuring how it and work opportunity. So could realization of

– You work you see and done. calls the in any more in I can TAM couldn't TAM place. get can the be see the Zoom

is, here. opportunity business, the opportunity I our believe one long-term and second is it. the near-term unlock I dug The investment as have should The us is confidence I the focus into in our business. help

that. So And the part the it leadership I last of believe then is team.

I every as team opportunity, is and what scale think for knows through the unlocks opportunity. into really gone that And year this it it. I've how leadership advantage of experienced of team leadership take that to

are quick those So three my observations.

part of specifically our The question changing on the other We're called metrics I second was your a changing. one part housekeeping. metrics out as not than any of

Arjun Bhatia

Thank and again results. congrats you, the on Perfect.

Pete Godbole

Thanks, Arjun.

Operator

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

open. is line Your

Terrell Tillman

very we in Mark, want there. after congratulations. evolution. I Aaron. I the Yes. two with that kind questions about Thanks. That also, I work XX,XXX did quarter. Pete, market its the of Gene plus I are And of was itself, helpful. the echo larger where Hi, management collaborative the to and Great market all enterprise employees. tend disclosure had and like just Mark, ask to the around

seeing apps, enterprises. hadn't oriented things kind the much? a of before? how get lot and enterprise through you kind the that now, other capabilities follow-up have had for calendar I we Bridge, of you you is Are have have all first have you a XXXX, into went you question. new then infrastructure you And you XXXX acquisition initial think are is Or you about more You'll for no-code that size, these as larger it when a much touched changing landings time are seeing

Mark Mader

Terry. Hi,

thing to requirement, opportunity is have larger, we think right. I a the beautiful land the not but

companies you digitized and large platform So wants to and so. the who ability of teams critical. for them someone a really they with can thing included say have departments wanting approach. But still really the workflow, gate do still to a of at I accelerate out have Brandfolder large within see that right maintain large to earned fully if evidence would We remains consume to optionality that that want premium enterprise

where with them approach the the a So it's think la giving fully wins an that as option. the is bundle not that we're figure I range. I example, new new come or a offerings, important performance we five And a had as that though, hand, team. a it's the Gene up forcing much very still packaged couple by we think something it’s where And were of in Brandfolder high we're carte needed. that's that these approach, say, with was said, good I would customer's wonderful

Terrell Tillman

on you. Yes. or maybe benefit. for for the question Thanks And a Pete, acquisition the disclosure Brandfolder

acquired anything Thank So I what in you billings think did one billings you laid expectation on for business was in because change you said FYXXXX? into $X.X quarter to there million. the of and you. the what if contribution Can remind going us out the you're seeing the signals

Pete Godbole

number and came in for $X.X million was million. Terry, the Brandfolder guided at to we we So $X

leaning seeing the the of in the deal answer of that's We sort Brandfolder. to did specific then And great for saw of we a So And market? into engaged in we're what really saw that's customer's what Brandfolder your We see them in sort product. the question. marketplace. traction

Operator

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

Your line open. is

Ittai Kidron

Great quarter customers in have as you it well. large dig you right what you X,XXX these think about, into I bottleneck commentary. is wanted to can biggest talk in now the is the is main employees bottleneck? million customer How XX,XXX taking that Mark, is know, $XX,XXX What and million? $X.XX into with go-to-market product-driven don’t much the them have on versus I $X.XX plus average getting and Maybe that that you, of spend that approach?

Mark Mader

right. All

have your prospect But the figure combination journey the the a for capabilities. putting two. intense mapping go sales muscle, really of amount to customer service, is you I if you're an a without out the it own. product on can't think to I sort of your mechanisms, of mean, customer, the the So the pressure you advisory round their don't that on

are we fundamental. with large with team enterprise services, in on those things build-out, advisory quota-carrying reps we as both So at are think leaning look and our that

in So say, the for that growth team would really opportunity I bottleneck out. the is or building

we're on and all doing building the but happen, piece think to right make team it. platform to the contribute things enabling really partners also to the it I it's

Ittai Kidron

Got it.

Okay.

so by this Or how year? say about individuals going And some quota-based percentage your maybe intend your you the about much of can – think I plans individuals to frontloaded as to going your team what you be? numbers quota-based least evolution at if to you’re year, through not increase and for that’s how talk

Pete Godbole

Ittai, this Pete. is

of every done as So essentially our we've increase investment XXXX. point year, fiscal recall, team. in sales the on are like stayed our you’ll we year we And planning size in to

So there. we started

going headcount are And more to the resources. the said XX% more the added first than of in part latter. we I’ve that year We like add

Ittai Kidron

guys. Got Good Very Thanks. good. it. luck

Pete Godbole

Thanks, Ittai.

Operator

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

Your open. is line

Melissa Dunn

is Hi for guys. Thank you the on question. taking Melissa This for Stan. Dunn

really expecting strength I in helpful. originally performance aware quarter. should think that of terms can we on the is And about ask your there first quarter? strong thing you the anything quarter billings maybe there would any anything QX color dynamics Is in the I in was a necessarily really be and be for obviously your in to had hoping that weren't guidance issuing happened the of when you one-time more flag

Pete Godbole

three expanded almost think covered sales those sort Those We things of of things. well. larger our remarks, couple absolutely We fairly the a would and referenced volume were in talked we I prepared across talked the about every less headwinds. execution. we the Melissa, of strong I vertical. transactions the case. say about macroeconomic We

the made. – cycle our time has improved Our pipeline line conversion all reduced sales with I earlier in our and time comments sales

Melissa Dunn

And Mark. Okay. for Thank you. question maybe a then you,

specific product, the experience there the with to that are enhancements you're solve things for the user improvements? new to trying on So

Mark Mader

Yes.

refined I a there but is huge couple items. are think a One is, which right. and there's of think of feel, I discoverability, a more also look that, around part

ever-growing capabilities from this unlock don't have can have set those matter. somewhat of unless them, they We users benefit and you your

sure product what to able obvious. to build, full really over to do. being certain to that now a we've there's and to again, is really looking aiming more the make to but we're that's added So years, much we're across not And only attach make lot the and our job also forward suite the things

Melissa Dunn

Okay. Thank you.

Operator

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

Your line is open.

Michael Turrin

breaks out as product the the We Good highlighting, closer expand sounded to that additional side, on It perspective? you that the rate XXX%. from penetrating Can is net customer on on that that effectively whereas large opportunity the Thanks. customer you you're defining billion $X.X how and how number XXX%, just I there. ARR that a the and you're expansion in expansion large low prioritize go-to-market the appreciate stabilizing opportunity like commentary disclosure afternoon. here think. Hey

Pete Godbole

today way a the So I’ll customers X,XXX The of to and customers we we have employees little we opportunity. first discussed how already of after going Mark are of part the it, take we bit let I'll than are more who the second speak have of said, part the sort opportunities, ours. XX,XXX

over base converted pass the to pay and up XX over in come of the opportunity I’ll us them sizing. million and would billion. we Mark, to the $X.X math, I $XXX,XXX the remaining way who all population revenue. did greater those than $X.X have did with We That's you took you If recurring you. annual

Mark Mader

Yes.

strong I think really of with part go-to-market, of approach. very marrying sales expand an motion terms and I a in is is, opinionated the a think this land big

So customer assign things a significant level solution a that can if across are enablement, we of has significant customer set. a needs a more the ROI command these planning, into to automation, that in with know it, would go we come we We larger can which investment. significant

to the developing have those more getting So it to how up. we that which we pairings can to from now. scale. to dramatically something again, we're that's exist XX $X.X I contributors And right bottom top-down company best need our help, ago, that now examining years the is of the think of few A built been didn't guiding muscle increasing with advisory, has million over paired path – at and if

Michael Turrin

Great. Thank you.

Operator

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

Bachman, is Mr. open. open. is your line line Your

you mute, on please are If unmute.

Keith Bachman

or direct has UiPath, I it may with RPA. Yes. Mark, Thank on particular, them Right you. get particular about an how your signed but a indicated think and next think in now, partnership on couple And of ask relates the of to two I'll to in I that I thinking? I landscape, could. if wanted update do questions years? to Mark, recent are opportunity wanted risk first as the you I to related the you segment unfold market the overlapping you how think that competitive

Mark Mader

I’m actually going to let Gene speak to this one.

Eugene Farrell

Keith. Hi, Yes.

the agreement need RPA to on-rails have to really space not both desire customer signal unstructured you really enterprise take in UiPath, in unstructured to capabilities. for of start where to what those be – from do that that's variability a workflow and maybe where work kind in that they're adapt off our relative – degree was doing think or going dynamic that ways. it receiving to between workflows work, actually customers machines we were I yes, I I'll work using improve both being that the you around can And think workflows driven efficiency of their And cross that from to around managed and an routine are be throughput, call, really where – with playing dynamic to companies by and a structured able the that see pass to you then is more, modern question out structured at RPA able able be to and Smartsheet. into

versa. unstructured You side to move in structured can start vice the and and

systems call other between because that we find more converging. see to think your really each to eliminate what kind those and how machine increasing workflows I those by talk do mainly humans today as think no-brainer the of there around I will technologies companies to be question more is can't are done intelligence marriage very I being well. really Well, ways leverage

happening you really, think quickly. really really I adapt the where than in very change space different unstructured to have that's what's ability that to and have

And there's a complete overlap. so ever don't think I

And side think able nice to be platform support the to as it's our of going unstructured positioned to be really is a forward. the choice goal marriage I of work.

Keith Bachman

Okay. That makes perfect sense to me.

on The second rates. increasing penetration your is question dollar

your wondering an even the is a try increase that extended rapidly. plus you think per and you of more largest relatively of up your the customers, how dollar-based while moves so low, that that percent you spend dollar been just moves it's If look focus still your you two how next your And marketing-based the do as the the strategy example. family, years from talked Accelerator in about with both and other about the now to to two over So how on combine that now you penetration as is speak? think capabilities years do think dollar you area that wanted capability-based accelerators if the on you I'm I billings that to in your customer But and words, projects And do percent look at penetration, changes? nicely, customers? unfolding needle coming at of that your marketing to

Pete Godbole

Yes.

of me break let So down. kind this

I really different elements to it. think a there's couple of

of has do with opportunity way operate I they that been about customers we of be come to to think of companies kind they've talked pandemic. in likely intentional it provided some in journey. the this Mark things the we realizing COVID way It’s amazing for preferred are more helping opinionated accelerate as going starts usual as more not out around the how where and be the years. operating their business

a catalyst rethink there's they're real rethink folks to companies for and to so how operating. And

services, that sales offerings. To tip help support sphere. us probably of and on I our elements is So guide think journey two them through I our think of key there's being that, really positioned support at the the to really

first premium the platform capabilities – in we’ve platform The talked is about.

the time you well I licensed go that. things times a from One solution always not works to immediately a to our want or able the specific say, And value hey, platform, with of But so that many customers specific we've when just learned pivot a when use need, beautifully. against over case. of customers sell for drive lot next of to solve they is they're subset this a that here, then

we the or back So to relicense down drive and their to friction come in and from ability which value process slows Smartsheet. expansion have creates it

Smartsheet going to customer's ability in more holistic shifting value for way. extend approach, and we think the So broader solve lower a brakes cases use of set platform premium to a our is friction the of the a off we quickly create and to more enterprise across take really

is I that no-code Work third the The thing, capabilities that would Apps mention introduces. and

see cases course really a around scale at business be deployed to and no-code where as lot truly year we create modify able positive present. and this to manage signal customers. there's really lot businesses and use of to Work workflows a and that because from seeing are we're build really of It’s to configure Apps curated – true scale. We and early, to still empowering then really are or the at ability really specific solutions and quickly, that over platform differentiating enable very bringing deploy them experiences these it's and adjust But really, users when market

are the think combination I journey think with capabilities, Apps go-to-market I Work they intentional really large ARR to our and accelerating the and customer. of our So advisory the that platform key to

Keith Bachman

thanks. Okay. Helpful. Many

Operator

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

open. is line Your

Scott Berg

Hi, questions. favorite Mark, won't your quarter for you call. here to thanks And and pick taking on this Congrats promise Pete. and my great Gene I I the ask for on Gene, children

Eugene Farrell

you, Thank Scott. was I practicing.

Scott Berg

days saw guess, the this the question consolidation, two last last to the space and the get I XX And particular? a management in the I think how Mark, timeframe, competitor maybe acquisitions the work you I I question, is on this guess we speaks another anything over similar first acquired maybe days had call. collaborative the do ago. unfolding the over space short two sector asked since space. a next Thank years I But XX in in acquisition But heightened does four in see you you. highly certainly in last think

Mark Mader

acquisition and don't growing investing is heavily. would I young But Yes. I we're really space that the commentary a and dynamics. the it's on of sort what say, have recognition

You have Adobe Citrix, larger evidenced participate. wanting caps to as by and

our say strategy – really adjust there's strong meaningfully events investment focused there's growth on it. our agreement So or those And that posture. I we're to strategy caused us those executing our opportunity. that both think of neither maniacally I and And will

Scott Berg

And Got here next kind couple about But upsell the then low a steps that looks still maybe XXXs you question, asked a or rate pace the couple, of about stabilized of to someone it's of think over in else rest revenue the economy here. metric what we in is the quarter there there current pre-pandemic it. as or has the the the normalized take follow-up net Helpful. retention as rebounds? like to recently saw

Pete Godbole

Scott, this Pete. is

that's our mark. the rate quarter. first at has the And sort stabilized XXX% of net QX of COVID sort because So dollar lapping guided retention it's really

the I we think net this down, moderate improvements into factored dollar to that's for to and forward I break of waiting were pick my up commentary instead around going piece are upsell of rate. if sort the retention in

Scott Berg

again Got the it. my Very helpful. on good congrats Thanks and for quarter. questions taking

Mark Mader

Thanks, Scott.

Operator

Your comes of Canaccord. line next question David from Hynes from the

open. is line Your

David Hynes

seemed back a Hey, middle, middle of you stayed the the thanks And of you're couple better, just last I seeing in I a on to finish explicitly question, If Or recovery? but Scott's want in QX. the like there just think Mark, and of of about there strong, it to really with something year. expansion transactional customers was kind is business ask But of Congrats recovery ago, guys. want time right? fact, I change would to what customer me in was blip to was kind the I think fairly it strong getting if that healthy. on build of a that in cohort. kind right? the enterprise business The there? you're did with some kind is, suggest And numbers seeing it affect expansion to quarters

Mark Mader

the I'm things really sales all and we're the of larger customer a one cycles stack, both at is shortening that see down segment, again. that the up to think of seeing pleased I really

good down – really XX% in So to from we we’re if a what about we QX, that's saw indicator. had and XX%

just velocity it's factor. employees, important companies. XX,XXX the really at to a I over as look And the of down it's So emerging all not velocity way

So we're able to positive that really that's monitor. trait a

a simplify do of huge in different – I important think number are the a – ability think, macro input the think I transactions, that the to I of result. think we’re So huge, one's achieving terms I is offerings, too. to

impact. I where our COVID, go easier of of out coming we smoothly. continue what large vaccinations to as is for an people to do, But consume probably think control within what’s hopefully making still are We

QX, So customers. right obviously, decisions hope again, get whether we're as making it what launch packaging with always will there. and and existing The new And many that real, all does. choices it's the interesting you to in said, on these I puck Gene see when now is we we to of does things, go think of ice that for research

David Hynes

Yes. a sense. then segue. And Makes maybe decent

function, you marketing, So and I concentration like sense of huge have a of make mean, that Like else where think organically inside are large by more Brandfolder have you would tailored been verticalize organizations there you vertically users kind other opportunities where efforts? obviously, right? that of for a has could that success in area. in stuff you done do guys some

Mark Mader

– that and transformational really we're that's a doing for an every real of and an with to use there kind some but the space. that's of away in for opportunity most of in that that customers experience is of call we're we that moves right legacy the one newer platforms something stuff most now and lot project the kind pipeline, XX,XXX from Smartsheet, significant where has really the think, I'll the company and I PPM. feet work limitations pretty excited and a process today, have our of a it disrupt we disrupting deliver really, Well it's element the case Almost of management, obvious program, area about us traditional the think

an that's that launching later on year. area we'll So something we're this and be focused

and of lot that the think signs on I workflows able launched and workflow recently that early a we've generation I of that, our signs with to really Beyond automation signature think – have we're seeing positive being document some combined potential. leverage there that capabilities

I'm on but that bullish haven't specific function, We a exploring. on is area that an narrowed

David Hynes

color. Thanks great. That's the for

Operator

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

open. is line Your

Mark Murphy

will from industries Can those just of I on entertainment. still you. in during QX, retail kind Thank headwinds in type travel forecast, Yes. stayed customers see And saw had you minor this materially? you comment QX? strain you seen you and of Did believe I add you and year? reengaging those my with some fiscal congrats. Pete, do what like your

Pete Godbole

So in Mark, I'll question answer two parts. your

The it. piece first is vertical the of

customers see strong travel we about the your a continues And most We QX QX customers. a industries, that described and of of part momentum number of similar So left did us the in headwind. be second between so QX, saw still back and QX. on were and then impacted had I number returning who question the in in that in QX entertainment, QX industries sort same came to was

seeing So trend as coming economics that we're improves. back of people

Mark Murphy

you capability-based Are QX? the missed contribution Okay. you from might've able offerings One quick it? in Pete. ballpark mentioned that to housekeeping If percentage I item,

Pete Godbole

didn't it, XX% a if it, year of XX% quarter mention I same you the a to from sense were but revenue a I on to range give ago for the now. basis, a year-over-year, capabilities

for a how business strong you give our that'll capabilities is. So sense

Mark Murphy

into work later a more of Pete the happen And destined as And their getting cycle. done little settle that the more Zoom, maybe think, in how it perfect. Okay, how then category pandemic I maybe was And of Mark, wasn't to. perhaps signs maybe think companies just they're it'll referenced. response the about to whole management, outside was immediate something any back little this I'm category, are have I go – to a tangible distribution wondering but collaborative to a work to, workforces, something time you out. that that little of alluded visibility getting it wanted

the little extra wave there I'm So just wondering here? developing to spending guess I a macro of and is maybe glide path might seeing you kind something that be recovery beyond prior

Mark Mader

Yes. see extra that wave to I'd love develop.

conduct communication. recognition but say I on not recognizing an sort recognize, can mean, business. it's I only what is an that there essential customers upper that part lean and is also of I my and tool day, think handle. to lot we are to is actually the of synchronous Zoom of I a can would what, They’re I on am bound think, that I people

to notion something, something not a is ability asynchronous and think very to important. this on work, I rely mechanize live have of So the conversation track

are synchronous, think phase – absolutely phases, here now investments about people I going talked we are about right? synchronous. people we're react, to earnings of of sure support, make we ago, calls are Phase as talked we synchronous, And was safe, the async in entering that make one is couple it. a and

Mark Murphy

you. Thank

Operator

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

Your line is open.

Ryan MacWilliams

for to maybe we this the helpful congrats think how retention a Just segment could strong for Thanks greater quarter. during calibrate talk the and you employees the be normalized on COVID Great to segment the for XXX% should Can about see in dollar-based growth retention this opportunity. results. retention question for more in how rate about than enterprise taking net trended year? with customers Thanks. the XX,XXX at and

Pete Godbole

Ryan, this Pete. is

the describe would other we in terms I number a it also So segment XXX% segments. net the where it segments, compared And as was rate. this or employees less segments segment hit reported, retention started. lesser of which we showed the to was smaller had dollar effect Like pronounced of

say we So then first the as saw how it's play out. this to is going to play think I going that hard forward, out it. of And part

given some sort that as built modest of of We into improvement have guide our to you. all we've

Ryan MacWilliams

that. Thanks. net customers? with And results welcome on appreciate as opportunity flow larger After this cash free the once your to on capitalize Pete, year for on board. you look quarter, strong what's thoughts enterprise in again, this I

Pete Godbole

of as developed long-term said business. stepped days, job investment. I opportunity I CFO a around really the as XX as the near-term the the growth I've So confidence requires believe level into a And I in

opportunity of So growth on the free keeping flow is follow go eye philosophy the side cash plan our of after it. to an our long-term while

sort I'm scale. as guidance model, year at look looked you to I sort our fiscal we generate going from I at forward, of half cash we've free guided just as free the of actually our ability of have midpoint at flow cash to minus way that our model to that confident called out. to minus you if improvement what express of the a at in the X% So a – XXXX believe has X% flow And

Ryan MacWilliams

again. Congrats, color. the Appreciate

Pete Godbole

you. Thank

Operator

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

Your line is open.

Brent Thill

where very the just Thanks. when pockets next on mentioned you Mark walk could of a U.S., for federal are us federal. through curious close. outside look seeing strong And if space? the you federal chapter I'm you you the even opportunity

Mark Mader

nice federal year. we the did see side, had I year-over-year commentary our the I think throughout on on growth. progression And

serving through One to us authorization. of the the IL-X going so IL-X-based provisional really getting we really platforms big connected to next get And our for can right. think technical first actually that for sets selling was milestones year, the I now, the We're a customer. work good move foundation

So that's as on as agency of both on the that sort as side side, defense non-defense front. well the on the – the side, as well military agency

high that have again. for expectations So

have companies the us, in a data last of cloud positioned less. we done I that. cap markets alluded Europe. I on around are but conservative well European the with moving think I seeing lift think platform over that year front. for in far extension work are Pete we We're more a public for all the this to cloud would opportunity the growth other lift, really larger having is who to to Still residency And year, our achieve say

So I biggest probably would those as the two opportunities. highlight

Brent Thill

just just a follow-up. quick And Pete,

you growth ended where in recap mentioned terms of Can headcount more you think in XX% you the fiscal the half the for of just first year? the full-year I year. last

Pete Godbole

about revenue headcount, got make – to Are talking want in talking I question, growth Are your about sure So Brent. billings? you growth in okay. I you in

Brent Thill

headcount, yes. in think I

Pete Godbole

working XXX headcount the growth, was And I number. heads. for off that about I was XX% our essentially, sales referencing when So was

Brent Thill

to rate be fiscal in last And you clear Okay. from not, that and the growth? was that growth just can If on what back year, did growth the the wanted that? we circle have

Pete Godbole

hit, in was So year last the made middle the stay additions as had which year of with to our and we capacity decision our investment. in a the the profile remember similar, growth we pandemic stay point but

of – adding built year, So resources top we fiscal model XXXX. capacity start we year as the into fiscal of the on year we start through the go are next through of a this

Brent Thill

color. Thanks Great. for Okay. the

Pete Godbole

course. Of

Operator

Your Tyler comes from Citi. the next of question from Radke line

Your line is open.

Tyler Radke

for my the reacceleration growth the of taking full-year unpack for put this you thanks guidance I year. of kind a question. you're bit, up obviously little wondering was guiding the to Hey, billings could a kind us off the if what nice you factors outlook, improved assuming And particularly bigger accelerated are just I of But you imagine you're the made. churn help the some kind rates improve. trajectory? probably from acquisition of understand impact that driving maybe There's

Pete Godbole

really of important are So we billings our to were business. with in it some and indicators to that the pleased performance spoke QX, this

thinking elements XXXX, we’re that fiscal about this As there's business are important. two in year

As you of think as of think business. expansions billings, them renewals, and you should new

So based new business performance our the trend we're QX and on we bullish and feeling carrying on expansions are really the forward.

renewals going out in, from XXXX a therefore into year in fiscal to XXXX, we – that year that last year on and fiscal year billings based the had I what On year that's renewals and which look fiscal we year are that billings in fiscal itself creates at fiscal bookings XXXX, play XXXX. in represents for call for We did renewable headwind opportunity XXXX. our us

the sum I it, headwind So the and forward. positive that would on and last carry expansion business really on say, billings billings of a on the from year new

Now first out full-year of that be of half and then the headwind than normalize. the will rather in probably manifest sort ease or more year the

Tyler Radke

about of missed earlier. benefit of doing year, potential packaging, changes think a it way longer-term on I year is to next there or impact of if some dynamic? if kind Great. this the to that, pricing I just either the on you're it's any And that and the apologize But

Eugene Farrell

mean growth to and friction the we premium our now. customers, and individual would that into capabilities making forecast that not believe have that I we right help be our impact I changes think Well of expand will leverage customers removing but to we but – kind easier investment believe built it and we're what because we is of it on the not say it accelerate growth rate, build would disclosing make we’re solutions. for those

Tyler Radke

much. very you Thank Okay.

Operator

time That's to back the over I'll questions. Turner. the we turn Aaron call for all have

Aaron Turner

Great. Thank you joining We'll everyone. speak for next you us to today again quarter.

Operator

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

now may You disconnect.

Smartsheet (SMAR) 17 Mar 212021 Q4 Earnings call transcript