Smartsheet Inc. Reports Robust Growth and Strategic Advances in Q2 Fiscal Year 2025

$SMAR

Smartsheet Inc. (NYSE: SMAR), a prominent enterprise work management platform, has announced its financial results for the second quarter of fiscal year 2025. The company, headquartered in Bellevue, Washington, reported a 17% year-over-year increase in total revenue, reaching $276.4 million for the quarter ending July 31, 2024. Subscription revenue saw a notable rise of 19% year-over-year, totaling $263.5 million, while professional services revenue declined by 8%, amounting to $12.9 million.

Despite these fluctuations, Smartsheet achieved a GAAP net income of $7.9 million, a significant improvement from a GAAP net loss of $33.4 million reported in the same quarter of the previous fiscal year. This recovery is reflected in the GAAP basic and diluted net income per share of $0.06, compared to a net loss per share of $0.25 in the second quarter of fiscal 2024. A key highlight of the quarter was the company’s operational cash flow, which stood at $59.1 million, alongside a record free cash flow of $57.2 million, representing 21% of total revenue. These figures mark a notable improvement from the $48.5 million of operating cash flow and $45.5 million of free cash flow reported in the prior year.

Smartsheet’s CEO, Mark Mader, emphasized the ongoing growth within the enterprise sector, noting that over 70 customers expanded their annualized recurring revenue by more than $100,000 during the quarter. “Our customers are scaling their work on Smartsheet, and we continue to invest in product innovations that empower them to manage their work at an even larger scale,” Mader stated. He also indicated upcoming product announcements to be shared at the company’s annual customer conference, ENGAGE Seattle.

The quarter also saw significant operational achievements, with annualized recurring revenue (ARR) reaching $1.093 billion, a 17% increase year-over-year. The average ARR per domain-based customer grew by 16%, and the dollar-based net retention rate was 113%. The number of customers with ARR of $100,000 or more expanded by 23% to 2,056, and those with ARR of $50,000 or more increased by 17% to 4,140.

In terms of product development, Smartsheet introduced a new subscription model designed to simplify pricing, budgeting, and administration for customers. This model, effective for new customers starting in June, is expected to be adopted by existing customers in the calendar year 2025. Additionally, the company launched a board view, a Kanban-style feature that enhances task visibility for users.

Smartsheet’s market recognition continues to strengthen, as evidenced by its Customers’ Choice distinction in the 2024 Gartner® Peer Insights Voice of the Customer for the Collaborative Work Management market and its acknowledgment as a “Vendor Who Shaped the Year” in two IDC reports.

Looking ahead to the third quarter of fiscal year 2025, Smartsheet anticipates total revenue to be between $282 million and $285 million, representing a year-over-year growth of 15% to 16%. The non-GAAP operating income is expected to range from $42 million to $44 million, with non-GAAP net income per share projected to be between $0.29 and $0.31. For the full fiscal year 2025, the company expects ARR to be between $1.177 billion and $1.180 billion, with total revenue projected to range from $1.116 billion to $1.121 billion. Non-GAAP operating income is forecasted to be between $177 million and $182 million, and non-GAAP net income per share is anticipated to range from $1.36 to $1.39. Free cash flow for the year is projected at $240 million.

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