SMAR - Earnings call transcript Q1 2025

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Operator

Ladies and gentlemen, good afternoon, and thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Smartsheet First Quarter Fiscal 2025 Earnings Conference Call. [Operator Instructions]

And I would now like to turn the conference over to Aaron Turner, Head of Investor Relations.

begin. may You

Aaron Turner

Abby. First you, and everyone, welcome, Great. of Good Fiscal Smartsheet's Quarter Call. Year to Thank afternoon, XXXX Earnings

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

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

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

the that the differ believe actual forward-looking materially and/or we may our reasonable, expectations results Although are adversely. statements in reflected

are statements call call law. obligation we as not update of result any made the as information by new as statements on today, a -- these during events, do assume to this or information and future to forward-looking of required available All us based except

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

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

Mark Mader

. This XX ARR XX.X strong billion revenue earnings move We XXXX. everyone. we first improvement afternoon, and Smartsheet last Smartsheet good with Sephora, among with customers, Smartsheet year ARR for global our Nestle, $X of We quarter. employee more geographically and and the growing and experienced markets their XX% Aaron, across with finished demand its In group from up a expansion than across QX the with through has the Purina, Singapore breadth QX, media including The In million ended XX and international that multiple users. the dimensions. reflected other base. fiscal than for our is recurring within of to expanded customers we entertainment quarter, others. customers steady quarter Thank you, saw over expansion as core company QX $X.XXX significant users, call to year. U.S. Hong expanded million, from now have quarter capabilities. more in We $XXX,XXX. of and number their Ross by teams premium and Kong, stores usage annualized Welcome

use workloads last the of manage Over information Dynamic manage the Smartsheet, in the confidential of has use of scale doubled on shuttle and to the has to expanding View the within year, organization order their data company's tripled.

flexibility the of In subsidiaries asset partners and EMEA, a a agency need saw for distribution assets of Smartsheet's content meet by brand large They security company growing of the X-year of Brandfolder solution consumer high-scale management built company business. tool in their electronics The their couldn't power the to of replace millions value integrated They deal. data store that within a and platform. their around the demands to will the world. and workflows this were signed technology enterprise

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power competitive the sheets, as data and of crucial and Smartsheet which a consistency mesh projects, solutions, on shuttle their across leveraging built management data to maintaining standardization showcasing premium The and company enterprise, are advantage smart data their capabilities. of driving portfolio IT are interoperability. sees are our by Furthermore, client value

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within going forward. deeper customers Smartsheet our value by solution as for greater to unlock platform on a This engagement am term establish and pleased pricing is enables will modestly I be term. utilized Smartsheet, To in new enterprises XX, existing it accretive We and near new the rolling and model. packaging share customer to that the the we and accretive longer June our anticipate being out meaningfully in

more control the and provides to model and transparency number greater of a per to be enterprise set able with pairs new entire new greater access plan users model a In and lower will providing features on plans. price to Smartsheet while who administrators. access increased broader by to user licensed The feature business the users a organizations offered aggregate,

model creator anticipate June will XXXX. from are and We collaborator with shifting while New highlight transition on existing as refer change durable pricing paid of long-term which be this for XX, customers model free model new starting in licensed. growth. this onboard packaging editors a our members will calendar key this A and foundational is customers in year annual will to

to as at continue organization guests no will an to external referred cost. Smartsheet access and to internal viewers Users

so manage workflows Smartsheet system enabling users drive available for which to an access a by of and the people while This their to do time category, a make employees effectively. manner organizations full contribute provisional first to enables admins breadth in member subscription. the will will friction to the increased within virality more platform the low organization create allowing in prior to added launch being The to to limited to

will accommodate organizations from benefit While to will new existing the XXXX, demand model their new with the subscription renewal the bookings customers we them to subscription financial in incremental model dates will near- the wanting new we transition from sooner, as as new and existing to we onboard information convert on More model. anticipate and customers be shared and long-term as benefit appropriate. customers some to

from We continue tools the to our unlock meaningful of teams data in actionable AI to they stored see the adoption platform. as empower insights

insights simple February, element an May, of in launch we tool GA seconds, data, reports released and to AI inquire analyze and language with prompts. plans used AI's Rather from customer manual can business with get Smartsheet is users AI enables Smartsheet Smartsheet for results AI analysis. quickly. to generate common that half our enterprise in content significantly than their data have complex nearly need logic creating This dashboards, associated a of customers work reducing plain get In and reducing complexity. next type data Gen of data is users the AI customer more analysis Since and

Teams decisions work. and can make data-driven KPIs, track easily unblock

In user. our so can will with Our time and This feel. user vision insight unveil generally sheets worker XXXX, investment. smart a comprehensive look co-create has to across modernization business business on platform marks Gen a and enterprise these of challenges we all year AI which and available view, FY we build a 'XX multiyear to assistant bring power to right applied launched power the extends be A AI to pivotal portfolios been is capabilities to right line any our solutions powerful work. April business as the people enterprise within for plans. align our every unlock the users

a approach Boardview in solution We're will Boardview, with work horizontal real in teams pleased and of is interacting solution offers highly way. to Agile to of assets. sheet. a the provides and time that to visual and organize Users July, View that with progress progress, line communicate track announce superior a into information on with a [indiscernible] all-new stakeholders collaborate launch can organization stored in for our visibility work modern smart Management. visualizing Timeline status work in time we

view successors data and believe that category-leading fall represent line, With table Both we and board by views XXXX. and modern customers. the and hub launch Looking to views. task our new the further This management. performance, the table existing of time will user-friendly views intuitive scalability ahead, new be for project, is experience and are we'll our designed for Board UI more an innovative, a win to table huge

X a very Crop the weeks Conference X front, Sciences. we role On Engage engagement Committee International client keynote, in in Bayer played Olympic EMEA customers inaugural the during our our London, Customer and visible ago, which hosted

them single source world's to events. International most using As organize Committee the live are of enabling they suppliers key an significant connection of Cross-functional Olympics, is truth, become the sharing to work [indiscernible] streamlining London, their has drive use workflows their Smartsheet their to can one to so shared and they the Smartsheet Smartsheet between XXXX Paris onboard efforts. our deeper Summer teams. platform allowing Olympic

help Sciences customer. giving to We're the as by we centralized towards Bayer's Amazon Bayer into Smartsheet our down everyone need. adopted ownership. to Crop unify break proud management shared enable highlighted Bayer enabled Engage stated cultural visibility global help press collaboration to enhance one has shift work teams Smartsheet platform. a data in silos to and And real-time release, they

manage their have Smartsheet For across to a teams scale. decade, Amazon over been using at work

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been that Previously, the rolls is creating had across to it It's visibility one the have Team several into dashboards collaboration team. better making also impact and it data leaders team place consistency, the measure now visibility across productivity in of and members' team's data to into. drive work. Smartsheet automatically Smartsheet their spread workloads. up helping enter tools. difficult members

reinvigorated evidence within of solidifies packaging convergence capacity growth. continued model product next-gen the our new the launch for conviction our long-term of enterprise closing, strategy the and In success go-to-market upcoming with a around durable innovations, pricing our of the and

Now over the call turn let to Pete. me

Pete Godbole

Thank you, Mark.

the be transactions to continues of our fastest-growing quarter. segment generated enterprise the significant Our and of large business in number segment

timing that a and $XXX part Regarding initial being we for the share relatively given new our mentioned, buyback. quarter, Mark announced small pricing an contribution customers the the we million expect Earlier our board launch authorization to in modest year quarterly of this we change structure bookings. received the that . of also

on quarter. release our results expenses are before the QX for share otherwise to complete end through references by few expect GAAP to our the stated, our fiscal repurchases go earnings results call. the and to and Unless presentation posted results and the and commence will I first of now We buyback of the that was year operating a financial expect this 'XX. next non-GAAP the within significantly in basis all days to reconciled

to results. Turning quarterly now our

of XX%. came Subscription First revenue in quarter $XXX.X revenue representing up growth million, year-over-year. XX% at year-over-year was million, $XXX

$XX.X Services Revenue was up in revenue. or ARR, quarter recurring $X.XXX to Annualized of capabilities made XX% revenue subscription revenue, first million. grew billion. from year-over-year XX% the

Moving And percentage XX% XX%, customers The X,XXX. customers XX% on coming represent grew over $XX,XXX at to These to over number $XXX,XXX to of of with of customers our customer $X,XXX of now the XX% XX% ARR The ARR. $X,XXX. our respectively, reported metrics. year-over-year over is grew with ARR ARR X,XXX. segments ARR [indiscernible] year-over-year total number and with to from year-over-year

the ended our quarter and due customers rates to increased of retention rounds down in rate, our a segments We The customer smaller dollar-based the full elevated XXX%. churn to of with net rate all X%. inclusive slightly churn

back financials. the turning to Now

margin was total XX%. Our gross

or in flow the million Our quarter Free QX subscription income was was quarter was million. gross operating the of $XX.X cash $XX.X margin Overall in XX% XX%. revenue.

business be We will functions, and mindset, the managing deployment reflected in levels capital managing to This profitability. with and efficiency our of location run updated an talent. spans

to on guidance. move me let Now

FY to we million. the the second of operating $XX the expect to million and of $XXX in $XXX of to 'XX, income range to be For range million quarter be million non-GAAP revenue in $XX

income net share $X.XX weighted $XXX per to million. non-GAAP of be outstanding to based average $X.XX on expect We diluted shares

growth 'XX, XX% we full For to of to XX%. revenue the expect $X.XXX fiscal of representing year $X.XXX billion, billion

be X% to revenue. total around We services of expect

margin weighted $XXX million, We to income diluted range expect for to income an the operating $XXX non-GAAP the based of year non-GAAP to per be $X.XX shares and representing million net operating XX% of $X.XX to XX% in our outstanding. average to be on million share XXX

'XX are be our raising to We FY growth XX.X%. to XX% ARR

higher rates a quarterly the continue beginning ARR year we similar of to seasonality, Regarding with trend at the follow last expect growth as growth rates year. to

to business, are are and flow us our rigorous allowing managing accretive, flow our This free expect and representing margin free also we XX%. million, margin we guided model. X We the FY from in ago. cash is of just business a how 'XX the model months guidance we to In updated our show power highly significantly increase be closing, QX $XXX guidance our of cash performance what

Supporting the profitability in improvement strength continued this is enterprise. our

our engagements and Our are Smartsheet's enterprise workloads customer work management $X segment. given is leader. the the These of sticky, fastest-growing million customer criticality ARR reinforce segment are attaching the position we highly to as

Now operator. let the to Operator? me turn the call over

Operator

[Operator with from Instructions] question of comes And first line DiFucci the your Securities. Guggenheim John

John DiFucci

even out in comp, about quarter, was as up how thinking the should of be an again, the same Pete, is market about primarily sell for Pete, But the growth bit sector, universe. about the how be great, of a in up, you you said normally ARR, on little better-than-expected quarter a makes and different are So think the easier The which, the tease talked parts this little new than it thing that So more signed the looks to coverage of maybe that numbers business if stand out to this past this public that would in relative most throw a the we last you into for But which put better you [indiscernible] you about business of new little great. guided would you that small about like kind the Mark but and try that. that you've software, can that you quarter. our when we year? that than there, about about talked rest this.

Pete Godbole

is Pete. this John,

of and question, about I'll question. of sort remains the and think enterprise That's your In strong in how of performed. QX. they segments talk I genesis your were the us enterprise, of for consistent When terms

of So kind us. did well for

performance a prior our On of the well. to and had in said we trend out as played it, sort to . quarters SMB of prior followed what consistent side consistent quarters

we the the that carry trends of forward we as seen a have So saw in from past. terms

John DiFucci

Okay.

be Okay. I my And talked know I my question, you've -- this about will second -- guess.

No, You not the past. talked in that. ask to going I'm

interesting. is ask sort me carte sell? really users Is new it I'm you a some -- sounds have? Let Does of skew you pricing this that there Or one. to whatever that different ala in still access given the offerings allows there sort is allow sorry. of of model, the which or like

Mark Mader

Mark John, here.

caboodle. access to So model the is someone who licensed full new kit and in the has

And a component. dashboards, So their halves, the think which generation have AI were every some . I a to we component. you. They the creators, previous what of like, from they difference our get really get that really how been had every mature content to the maturity of had really customers and single licensees is limited. create single They editors I was that's to have big the reports, alongside And can the mean model, things you minority mature. who it the when about our user relegated platform population. which model, big have

to creating work our virality which a higher great of more So should on platform. drive capabilities, is this leveling people

So really by encouraged that. we're

also a interesting lower moderately as in should performance with is well. It spell realm price think the quite point. good SMB I it

we this user a see customer, we result with I revenue quite the a edge user, but will price So higher believe lower think higher bit. per a it combined leading average help will in per count,

John DiFucci

goes, interesting. how that really We'll sounds That but it see sounds.

Mark Mader

the of are purchased, capabilities, carte are refining la also of well one offerings bundled in simplifying notion as also how and capabilities premium premium the while piece you about offerings as terms that a asked John, we persist. the

our core new this heart of the model licensing. So is

well. and portfolio and our that remains Our suite cross-selling our and alive

Operator

Berg. your of from line Scott question comes And next the

Scott Berg

or magnitude? prior And today. impact first you I'm update contemplated of you, about about accretive it's the in kind How meaningfully packaging. to the the quote over in start Mark, a being whether of about It's pricing improvements is the half that, my of can X-parter. your a is that guess then, frame going kind contribution new I pricing Pete, frame time. back to guidance you any do when talked new one we that time of Or the that a here Was year. here guidance? think

Pete Godbole

I'll start, Mark John, of other I'll the it. part on let

did the customers, pricing the we due made of for launching make we're part contribution So not previous this that was to change modest year. this change. and guidance ARR, we first in our new And model in we which contemplate fact this all, lifted expect to this the a

that's of kind So what's baked in.

Mark Mader

position model I what our bigger can on I the model. a When think Scott, And at customers already. meaningful number look accretive new or a moderately actually a and for do our to we of this from we've customers, transitioned new

sense some to We're value base that things can this of like quickly what as a in licensed do to is double could frame. and more the do we deliver for have can we what as what looking to we user So our behavior new customers business as possible.

will to say licensed X until customers. start or that we think can within or are those XX is I high in to XX you to have it position happen months. very over, confidence And or customers get larger I will within you won't able move this a user much be that what -- you our communities say lead will But XX

lower I only helpful. organizations IT what price the user, very this groups model large think, also new per more conforming expect. confident So I pairing at to will feel is And of that the be

Scott Berg

from Mark, a quarter. Got it. perspective, you helpful. Very the about throughout talked also then follow-up And improvements

comments it's of through different kind of just throughout the on the a If a quarter-to-quarter. staying behavior John's is moment demand business the nice that of should kind SMB kind consistent segments. question ago we of to the about quarter? So follow-up view How improvement the

Mark Mader

Yes.

couple Max us join had improvement from we a the One, of think mid-quarter. stemmed I things.

the team impact his favorable. presence think on and was I his immediate

in us then April. a and was partially March that in benefit So to

as later the saw offering, we On what SMB said, pretty consistent and get to I'm performance happens leading to get our introduce edge. looking this forward signal quarter side, Pete . new quarter-to-quarter. we on immediate we when at really the almost

the but on draw segment. Now amount that to in we very not bookings can lower of a gate, result the significantly more with have model going out feedback huge that's new whether of will very, quick

Operator

And the Stanley. with of from line Morgan your comes next Josh Baer question

Josh Baer

slightly quarter. I far lower key that pricing you results as packaging. from signals higher that's behavior pricing, Congrats and have a wondering the lower accretive new to that I on stick in as the gives then on to And customer or Any just nature. And what count user the equation aligned wanted assumptions confidence optimistic commentary? follow-up. or

Mark Mader

Yes.

I think the to some from directly of have proof the new who moved customers model. come already points

So And Interestingly, of organizations actually test as super real to favorable well at firms. a some both. it's both research project. not happened large there when as reaction It's the I in the been these as a what's with life we has SMB, about when license of the delete eager year think the how when sales is I Smartsheet. think say, this one to And things is I'm very what about complexity how cost the Mark, do productivity, to someone from business. that you you responds do

X can't first The house depends. it that I'm a things be,

actually clear to in to clarity And the super, more super organizations new act model less actually they a want patient I smaller is think model learn oftentimes, are immediately this on. and So high.

deeply. So understand have learn large decision where and they more sometimes longer can cycles organizations

this of both the quite ends favorable think will spectrum. at I So be

Josh Baer

to I margins gross then these just And pricing expect and any from to clear. changes ask packaging. you wanted to changes Very if

Pete Godbole

because over to Josh, top we the of . revenue we accretive. that to have gross the We levels margins margin meaningfully line, total are be at time function are not the we we going do think view a and gross maintain

Operator

with Securities. line And question the Truist your comes next Tillman of Terry from

Terrell Tillman

the as Mark. Maybe seemed asked grown over that the If question I've there years was the a a came that actually like for this first business has step take an back, quadrant out, in magic important scale. you, milestone. repeatedly we

wrong like different and CIO step see of maybe put starting I work to to vendor you seems of you RFP because bigger forward. GSI strategic mouth, the I'm consolidation want partner an or The a using tools macro. purchasing which absolutely in Are follow-up. it's more if management been I going a or take Are so strategic they some tell don't KPMG, just then this. have about play expansion? just start enterprises back your potentially whether C-level on to talking had words and where to me And starting or see a sort You're

Mark Mader

there's are. it's fluency We noting what higher I'm in really category. the that And -- a with much is customers

not how So governance even scale. the how your of we're X every These getting, plan in the of they're feature around, across types do This set of perform ago types came business present now. able at does apply time of that a and up feature corporate highly management doing set that core what just analysis set questions we're notion to are units single to almost diversified being policy. conversation, never and things years

that today how So from again, we more say, and would yes. features much strength enterprise getting our yield that so -- I are

the customer, to highest questions now. customer is feature developing say, these who a The just willy-nilly mention. I median of is I've single not it that There's high-end a on customers, set approaching seen everyone's asking the would

So next all future need investment choosing as is of that environment. more is the customers in from grounded to the our conformity where would eliminate the to opposed I still allocation to and strength. tools say to capital going consolidate plays our and we of

placing recognizing bets, bigger multiple are they're it a their CIOs doing but are think will I tools, that is places. in be where There that they fewer diverse environment.

Terrell Tillman

just I dynamics guess, you the NRR quarter, SMB. across split and of enterprise last Pete, kind

in out the between would rest the for I play there X% said And and had is they NRR on thoughts X how XXX% you XQ basically give then any updated SMB. businesses? expansion how that year? for enterprise update you Could of an on out the think played individually

Pete Godbole

over -- dropped points net dollar XXX%. enterprise And the stayed a rate it, XXX%. it couple So from side the over staying of still retention and of SMB

And would it and you to the way asked the it is year our you leave and as out they value view platform. when from value the turn pricing So new of start gain gain more out. it to future NDRR into the outlook, opportunity go that and that if in you to played describe on it customers an as kind our packaging I this we when I extend of how customers that's about model, more from

Operator

And your next question Jaluria Capital comes Markets. of the from line Rishi with RBC

Rishi Jaluria

sometimes to we've to start back walk any changes can disruption I disruption appreciate through upside term. pricing in packaging, plan near seen your a be from when the or the minimize is make guess, changes wanted there us I and you follow-up. in what from then companies historically, Can quick going maybe I've the And here. totally potential to to potential mitigate pricing packaging, that? and got

Mark Mader

Yes.

that, they them, with very in In point multiyear is thing Time big new impact they single peers think out said we release talking asking undergone new of recognize customer you to model. were pricing who the to And move thoughtful important. straight onboarding the my will pricing as And we're conform gate, to have we really about the immediately. when heard, timing. new we're existing the but a That to customers expecting to that really I really time they made them the will us need, model the in can a customers, to gives even date significant conversations. for do if engage if of XXXX. customers there's changes, existing until new to have was be not renewal move one understand every to about budgeting plan, you our have

we price the what so efficacy the customers model very the of and like lot the is launched education for when People be to prospects value do and the communication just communication robust want and understand across. is, a So existing your customer. what to volumes base. that XXth people close new then good can And and the -- very on communications bringing and good to is your not difference and to

would customers. big add? a We're with to account have sales what there Pete, field be you our management and going right We team. engaged

Pete Godbole

add would when the have customers and in they is pricing I part -- flexibility of other you that changes, manage. customers think model need how changes

that classify less or I makes when So this get call, nature consultative how to customers population viewers comes about, what flexibility members, and of and really with into guests attuned think to you existing model flexibility their any us variability. that

Rishi Jaluria

instead help That's delta helpful. then And for this It pretty just to what explain that on going understand the we're billings And billings. delta forward? quarter quarter? think to really us Maybe metric to ARR Maybe the as you, recognize can of and a range. was about big risk how Pete you the went it. between shifting ARR just a us I Got [indiscernible] help Look, delta?

Pete Godbole

that why different a of future which you dates billings prorated A And So quarters. that why from why is guided growth ARR, -- metric the is Rishi, like that. we the of When when bookings. look effect we've that was measure think And it. great bigger providing estimated a bookings quarter proration guidance with with a to a the by that's to go you is reported. ARR. what is ARR looked -- the which is had those and came billings what associated example this is . this rate, experienced the renewal which with ARR, previous aiming quarter, to That get and associated impacted implied everyone bookings much and like at metric or on in we've that's better number was the past is billings at true shifted

Operator

Research. the with from Alex Wolfe Zukin of comes question next your line And

Aleksandr Zukin

the more just was the think headwind of follow-up. we've maybe Or all of then expansion if it seat can you And about just seasonal? year, that go net lack of last some And that from linearity is go of we was quick bookings do kind I'll the even through on. themes about again, different, we how kind similar and macro of to and guess been in down more if that or the kind or trends SMB same -- themselves as how looked churn to is of we same the a it prior hear? the the quarter, given those noise And I I got questions year? the ARR were it elevated then we model talk new

Pete Godbole

problem. No

slow Alex, of sort went we April quarter, a with strong shift and momentum and That's solid traditionally finished the we the through represent really QX. building full our started the way February quarter. So saw we up, it's time, we enterprise but I'd pipeline as

similar Now there fairly I in stated deals of number past. XXX,XXX terms to saw large the the quarter, -- stayed and did we what that were all in the we seen enterprise was And the number we trends consistent, We I to SMB of of saw additions in we before the fairly the think the strong. cohort. reported what have

and that is noted down we the it trend expect went then and trend we through what [indiscernible] AR in strong through. we we that's as So year, to expect remarks, go in we the the prepared

Aleksandr Zukin

And net ARR, new clarification. Just what sorry? about a

Pete Godbole

ARR, Yes, when you -- net net of of you ARR it of new that it and as think if played how new was of you're bookings. out, -- think think thinking essentially was I up if

think on us you bookings, a was of if it bookings. essentially, So for good quarter

Aleksandr Zukin

it. Got

just follow-up then maybe And Mark. Okay. for my

the think unpaid. at older look of we users I think disclosures been if historically, like some I XX% have

year, model impact this NRR the contribution this at mix? of go of about next think user look we through given dynamics on the over pay kind we changing and look the X does should transition? forward, And like how success as kind the year, going versus over what years as time we So free modest that

Mark Mader

Yes.

about that to as platform first monthly, how millions who's to that big people new of will going who's good are a we learn be and guests of We ago very that assessment need [indiscernible] many a viewers, will and able go to we're that really their our management think customers as released, out. when group quantify and model goes do visibility the I on have through that gets those well. Pete classifying into people to making does members, contributing. admins spoke lot second see through in, again,

is hinged the old it's on licensing decision where straightforward The good much that thing in now. XXX% that more model, creation

we licensed. in are used so of don't capabilities. within incremental who a and access do have our members is And larger to now drive drive be upside they have past, out. actually people in degree scenario play ability the the appetite to much a to in an full you're to population the contributing If to us one much who are would you you expect editors buying it licensees organization, fewer premium to fully a are was process what The which for see more potential I an didn't those on who wildcard future. portfolio, of to I muddled,

users offerings. the quarters as to is play the our what out. we on And suite as comment population again, grows, the rest of of benefit that's added So that, the of something will

Pete Godbole

a to question, texture previous your to add just of sort Alex, And little it. to more

ARR about implied growth. asked You

we're through to we quarters. going rate the progress growth year, As we see go that improve the through as

Operator

And your with line Iwanyc of next question comes George Oppenheimer. from the

George Iwanyc

kind hearing of customers Mark, from ENGAGE maybe on you there what conference. pipeline and an internationally? you're with the the overall EMEA starting Can update us give

Mark Mader

strong was us Yes. for in QX. Europe

customers, modernization very curious application. about We roughly our high the of remains caps XXX AI. very lot of have attendance. They're how we And large curiosity applying are in there around a

the our AI about the all it's now floor in very on activation. had our fourth We interest and used customers demo remains AI think, level So just released, would I scale, our half high. say enterprise booths. I where we have of

comfortable You're getting it. people with

really, from add of in companies -- to in QX? the over it from really levels outside all really showed of people how The registrations fact was Europe conference . Pete, saw that anything it high happening, strength So see of was XXX play as our curious terms first curiosity, the that I U.S. positive. first was we up were out. And Europe to all XXX over

Pete Godbole

short-term strong pipe George, produced for on I manifesting Yes, in is Europe both think, pretty was starting long-term market really and the -- I think degree work this up could general. And of us conference interest. was itself management pick quarter. the collaborative It high see to a itself in interest, which you

George Iwanyc

maybe theme, And Great. with the then the AI packaging. staying but on

in capabilities packaging? the As with introducing how you those are enterprises new adopt start to including this, . AI

Mark Mader

access the to of member who model has a one Well, new big is push to is everyone the AI.

longer no the haves have-nots. split between this and the there's again, So

introduce logic building a next to of the we do we level only of at doing it, on As the activate skills, is scale how not the may benefit but in you person from Whether we're the looking that look innovation the new formulas, also you're they're time the skill, you're grid. business content data. whether whether at through analyze adding generate looking how to

and memory to. high really, which degree in is comfort that to are people of a users muscle found a really high there's to there latched on I speaking What high, is

we though today. direct When penetration of new to And from enterprise go theme even looking penetration So they them to what up. with pretty a way it. to our love means that you have customers, working. it, to have user But consistent hearing introduce see it's across are still I'm drive companies pretty people through a app we XX%

user Pretty engagement. Everyone for on side. penetration company good hungrier is the more

think app, educate year come. that the quite well we I think will people we the in to and education how people is how lot of a app, nudge I in the in yield

Operator

And question line your with Fargo. next of Michael from Wells the Berg comes

Michael Berg

behaviors software. quick quarter. the ask to be to the procured macro names in I up a been a Any wanted on asked other your or that solution has to particular to earlier changes reason sequential buying got the as about out the Any different in broader rate appears what healthier call. relative stand -- across then And open some in why willingness follow-up. Congrats platform a to improvement manner budgets. than I notable slightly

Pete Godbole

terms of platform. I think And mentioned fundamentally workloads cases, at lot in from So reflected over way, customers. and enterprise perceived are XXX,XXX companies number different think we to by who valued they are saw that that they moved the how customers how value realize those customers in When it I million-dollar of things by -- the comes our are our Mark to are in a just need. customers you of of in think Michael scale, things And customers down sophisticated customers. how of in number

we out play saw that's So in QX. for us what

Michael Berg

follow-up margins. performance, progress the the unit the you there or Got nice it. Obviously, topline margin the performance incremental anything is quick some of Outside very enterprise year. a guidance time? driving in the of then can think improvement over through and on it economics model had you that's flowing just for And

Pete Godbole

nature a our you it business how in run have of at fundamental we it's where at think you means what do also I model But the of and we've which highly taken them locations Mark the close and roles my and which really look want accretive. in? And say, hire hire, is business, we done everything operate I we is really sort deploy when which we've to the I capital. look

guide. so of And that sort margin thoughtful seen very we've of and that. bleedself-through terms We've focused our on in been

Operator

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

Brent Thill

and by? fly really of industry. consistent headwind trigger Mark, QX? most of you curious good a this with it category? What product you April the Europe think through that really the a good And your kind helped getting resonated do others think line? bogged it what the I'm in Did Was Is not or just execution? in down are something you

Mark Mader

that do engage good of interaction, we our able time fast, view builds combine who without feeling itself. to I think came as was is step. when you quite few do immediately that enterprises while have transactions come the think these like, in a MAX to line the valuable July customers a feel team The to human of and and you that of something one right valuable effectively. one prospects a coming. coming in -- I that I perceived be on coming And and out look, a team. in And And show lot and I saw in more bit field little the got digitally confident. landed with pep with team the things think and now. our fall. X have happen customers they're when beautiful, And team modern is There's

convergence I we're one I about together. And every ways years around talked -- with think convergence And to AI, to operations. engage at I happens Engage customers that year the of convergence modernization, around unfortunately, of convergence. our our get This conversions I company. where don't new conference be the to are it around you coming talked the think going is that. sensing to customers the our

for they're think and trust a now. evidence long as futures, you to talked fact this, I know talked that coming they're a where and time, customers as For about something that we've hitting is looking we're about but them show now we've the Brent, and able are

Brent Thill

is peek like? to of we have Pete, going going sneak this in XX terms get do or wait look till Okay. are we June any to what to here

Pete Godbole

I XX. you're June on think it going to see

Operator

the line Citi. with Your Enders of from comes next question Steve

Unknown Analyst

has is is to table how you you've This for the are kind organization. focused on the seen George year? and on the or, [indiscernible] got Steve. it go-to-market a new Mark, the for is few of that alluded think on Maybe here times if them given you impact which and bring the double-click MAX of what the on to what could rest just really had impressive I you've

Mark Mader

Yes.

I have quickly. landed things think would X say I really

set with we they're we're that use it's cases like. get customers for that and a are for, before on to and new that aligning packaging enabling use of with marketing few having looks speaking having then months pipeline eyes and we to hyper a and on with [indiscernible] point this what to before him on our pricing cases and composition is make how first asking decision we're of customers that had also why launched a fresh engaged, understanding, we're focus view capital, cold. this model is what team what great the ramped, MAX . And with The market our to these deploying with a looking us, how

go and ramped then So being would combined case orientation use is And experience modeling. something pricing in driven packaging you that and describe from models, with the multiyear realization his of very, mean mindset, and background journeys, is enterprise last this field on. that very piece I participating talk up-leveling is whether ELAs, you enablement, on this almost I value can about like

is the interview really -- responding it. the the think things extensively process, are and team the well. And prosecuted I team These that he we've really, has during

Unknown Analyst

That's on quick great And allocation. hear. a capital to follow-up then

generation buyback kind flow back been, the pretty getting million, into the how has it's makes think strong of plan but cash buybacks. lot the free of of sense $XXX a number. plowed free Most cash the I the annual flow significant in a given

of how So And on of a the you little guys push growth? reinvesting sizing not talk why kind in could you triangulated just about kind more into maybe that? bit

Pete Godbole

Yes.

the And was, So very we a we the and disciplined with undervalued took that it stock at we stock when We M&A. with. balance input to then opportunities trade allocation against sheet off that M&A And to a invest the able our equation. against the -- how start would decisions have and price as made looked to we in in customers. ability balance being healthy one having to capital took for

elements $XXX led ourselves this combination We shortchanged a invest by to stock of the don't we've million So initial making to buyback. on think those opportunities . $XXX buyback. million

Operator

from line next And comes with Bora question the JPMorgan. Pinjalim your of

Pinjalim Bora

Nice the good see results. quarter. to the Congrats on

of completely customers are what pace are you you heard early and model made from that are of way -- elasticity pricing the understand for those to call. Any the Just you the collaborators? early or the in a And away existing packaging. seeing what I far. within I've comments you customers a I should basing moved collaborators -- clarifications point view so number of the what moving from conversion understand from say, this is have of earlier customers, on free Could kind the price you that to the

Mark Mader

question, collaboration in our So still first well to free the alive is your model. and

guests. We notion have this of

is for dashboard that If So communication all of and outside shares of cost. visibility organization sharing. their access a creates someone corporate no that when an at corporate domain,

consistent within have today. people, long-term no the important of of it, . only populations to establishing we view huge really are remain and with also cost. Those company so at of which the points are what do thousands virality. All Those touch people

notion to the of paid really contributor, editor are they rate terms to In you a is now. no conversion from a of because collaborators, speak there an anymore rate paid conversion around

you paid. engage you you're within to an it, you our adding you're work if organization and in commenting, editing, and are So you're product

So the second you you period, license. second, on are provisional this go you through engage, and the the

that and an to this well. that of on longer by lines do cross They're and So but population decision very very, it's user But decision free company is now they to important editing is gone. that very us. they're create need is really -- present contributing, no there's still administrator

Pete, you did And [indiscernible].

Pete Godbole

go Sorry second ahead. question. follow-up [indiscernible] ask the

Pinjalim Bora

were trying existing this I'm plan understanding. has the only had was to is I to -- your who just to also understand customer No, my paid if -- those who or free customer collaborators moved are customer now editing moving

had to trying terms I that's get model? I'm Or conversion. XX think with was paid So in are had all you that that, of XX, of XX% is into you XX, seeing what all if customer of those at trying did of of kind to move it of new this those X% that,

Mark Mader

at mega haven't especially just would conversion right? we You work the don't think, bespoke of I have user And I call pricing, At rate, scale, disclosed what you scale. Yes. MSRP. off that also

So those In I read that are to we've that the enterprise. large cases, most of would customers deployed. off got the say are ones

all who and segments. customers the ones models terms the come in We of research earlier, got enterprise some had feedback . already of that down and larger was up those But all and done were of sorts have testing on I referring our to over.

Operator

Canaccord Genuity. with comes line question Hynes from the next DJ Your of

David Hynes

a and to what in create lot How creator, what's possible, pricing really So mean Mark, of on time, at access the that them how were them you're you're use folks model. platform give the going out long-term to contribute the passive get create that collaborators figure to users value and platform. to previously educate a important going seems like of them how engaged, the from do be you full on same to past value. were help new a the part incremental driving I as taking

So love thinking you're about that. any on color would how

Mark Mader

Yes.

organization with importance I not actually driving it's -- think only user as adoption AI, but talked counts. percentage about the I the or penetration of

the sharing R&D, example, our know made when for building like, get do only what of a sharing. really our engaged can how model people looks be seen a on introducing development, when discrete think changes, more we've in making experiential sharing it's just . It's think in shared way And It's changes. or something, by think not number we feature interesting virality and we capability somebody around those the that actual you obvious. look I things more something we as product. of but better which uptick improving -- new of not we've it in of

want do you're trust and and with powerful to at our this here's that import try really you just And moment. to data you and someone this thing with them. go shuttle Smartsheet presented like quarters X going much e-mail great do do, you than much, on new our thing, it? sending an can is that didn't view, what we in an we So the them right time to fancy "Hey, and are on more education dynamic it, explore ago. going now, did When the silently you much and you new go to We launch say, we're care in about presented did e-mail then silently self-discovery

been [indiscernible] So modern many who Board using Card we a you this view. nudging, notion launch when view have this predecessor like users the of long for View soon, time, many, to

that you're to, the card them do to go And to make the get one. exposed your research you is very you a trying the things new if them much to ability the built when our easy area view It's are the a in back it. wonderful people of to on of good you one whole moves they of on wish really cognizant pull is of don't interesting and these things types So launch with and to are intent we design documentation through. team engineers and rely how development team

David Hynes

Yes.

then follow-up a Okay. sense. for you. And Pete, Makes

course So to revenue of over outpaced ARR expect would the limited quarters, last has year? X and we between we as consistently. with NRR this look history pretty retention. over pretty you growth and the to have But X ARR growth about relationship X points trend ratio the that have, net do How by

Pete Godbole

be because the in than you've going the find looking the going plays of yourself ratio ARR to out, itself, delta -- lower a be of manifests but other the the the amount growth being how there's think relationship coming to growth. will new same. one NDRR to that into at between terms ARR I that It's going got some and be you're

David Hynes

Right.

consistent think pretty X-point X you should at So it be to range?

Keith Bachman

be. It should

Operator

next Ader the question your of comes line Jackson KeyBanc. from And with

Unknown Analyst

This is Ader. Kyle for Jackson on [indiscernible]

head Can quick terms ones on you if And Just us this plans for looks revenue quarter. Pete, ahead where maybe were targets like here. have stand for us. XX% it count And X give are there sales some think color any our we that year? of guys capacity of that of then, you year? of had in you given the mentioned initial Particularly remainder I profitability we're subscription this the for capabilities

seems that tick So to continue to up.

seeing are the where and are success? stand-alone In terms the guys outperformers that are of made, where purchases being you

Pete Godbole

overall on point But sales on staying we're is we question little a more your are towards capacity heavily of weighting capacity we're segment. enterprise adding what is capacity. part first our the So the We're doing sales there.

of we've the sales will. applied capacity you we're where capital, So . sort if rebalancing

are on the question seeing where your that of asked part second and The spots. was capabilities you've bright we

customers performance love capabilities, controlled the if will. stars, I same seen remain capabilities general the think appreciate general the the view, strong a cut in across capabilities capabilities, shuttle, we've very in dynamic capabilities and the names data and advance center which in and of you top sort in

Operator

question. we And one time for have more

with will Our McGinnis final question come from UBS. Taylor

Taylor McGinnis

guidance, for and this change the packaging there. one much revenue and perhaps quantify ARR when that the how by top we was driven me, is is us macro you tell pricing still which Just look and of uptick the out understanding can at or

But bit software little many light costs companies is may of just the the raising be have or just curious, softer, is environment. that conservatism. making a more the for in in don't that's downticked year? that quarter anything You Or there mostly is

Pete Godbole

into your down guide break I'll first. the revenue question So

was that do. is we and the a we carryforward where some prudent because environment understanding $X how the the have midpoint we an that's level see the roll guide be what of what of year by prudent to and . essentially, of will the is out, million rest we raised revenue would -- thing So feel at

part a Now in the of that's we what combination with did of second terms ARR, things. X

we and prospects, had of measure and and applied is where some part starting. the solid packaging new the performance of it pricing customers first the in model new implication which The as is being QX to we're

Operator

the closing ladies concludes remarks. question-and-answer Turner Mr. I will And back Aaron gentlemen, turn that session. for call and now to our

Aaron Turner

speak with again Great. you and thanks, Thanks, us everyone, joining We'll next quarter. all Abby, for today.

Operator

gentlemen, and this today's and you participation. concludes we your call, Ladies thank for

disconnect. now may You

Smartsheet (SMAR) 5 Jun 242025 Q1 Earnings call transcript