Smartsheet Inc. (NYSE: SMAR), a leading cloud-based platform for work execution, today announced financial results for its second fiscal quarter ended July 31, 2018.
“Q2 was a strong quarter with revenue growing 59% year-over-year and net dollar retention rate reaching a record 131%,” said Mark Mader, CEO of Smartsheet. “We continue to drive better business outcomes for our customers by empowering everyone to improve the way they work, connect, innovate, and execute.”
Second Quarter Fiscal 2019 Financial Highlights
- Revenue: Total revenue was $42.4 million, an increase of 59% year-over-year. Subscription revenue was $37.5 million, an increase of 57% year-over-year. Professional services revenue was $4.9 million, an increase of 71% year-over-year.
- Operating Loss: GAAP operating loss was $13.0 million, or 31% of total revenue, compared to GAAP operating loss of $22.7 million, or 85% of total revenue, in the second quarter of fiscal 2018. Non-GAAP operating loss was $8.7 million, or 21% of total revenue, compared to non-GAAP operating loss of $6.7 million, or 25% of total revenue, in the second quarter of fiscal 2018.(1)
- Net Loss: GAAP net loss attributable to common shareholders was $12.3 million, compared to $27.4 million in the second quarter of fiscal 2018. GAAP net loss per share was $0.12, compared to GAAP net loss per share of $1.52 in the second quarter of fiscal 2018. Non-GAAP net loss was $8.1 million, compared to non-GAAP net loss of $6.6 million in the second quarter of fiscal 2018. Non-GAAP net loss per share was $0.08, compared to non-GAAP net loss per share of $0.08 in the second quarter of fiscal 2018.(1)
- Cash Flow: Net operating cash flow was negative $1.1 million, compared to net operating cash flow of positive $0.7 million in the second quarter of fiscal 2018. Net free cash flow was negative $4.2 million, compared to negative $2.4 million in the second quarter of fiscal 2018.
The section titled “Use of non-GAAP Financial Measures” below contains a description of the non-GAAP financial measures with a reconciliation between GAAP and non-GAAP information. The section titled “Definitions of Business Metrics” contains definitions of certain non-financial metrics provided within this earnings release.
| (1) | Our GAAP operating loss and GAAP net loss attributable to common shareholders in the second quarter of fiscal 2018 were impacted by the 2017 Tender Offer as defined in the prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, on April 27, 2018. | ||
Second Quarter Fiscal 2019 Business Highlights
- Ended the quarter with 76,693 domain-based customers
- The number of all customers with annualized contract values (ACV) of $50,000 or more grew to 298, an increase of 146% year-over-year
- Average ACV per domain-based customer increased to $2,002, a 49% growth year-over-year
- Dollar-based net retention rate was 131%
Financial Outlook
For the third quarter of fiscal 2019, the Company currently expects:
- Total revenue of $43.5 million to $44.5 million representing year-over-year growth of 48% to 51%
- Non-GAAP operating loss of $17 million to $16 million
- Non-GAAP net loss per share of $0.16 to $0.15, assuming basic and diluted weighted average shares outstanding of approximately 102.8 million
For the full fiscal year 2019, the Company currently expects:
- Total revenue of $167 million to $169 million representing year-over-year growth of 50% to 52%
- Non-GAAP operating loss of $57 million to $53 million
- Non-GAAP net loss per share of $0.56 to $0.52, assuming basic and diluted weighted average shares outstanding of approximately 99.2 million
- Billings of $201 million to $204 million representing year-over-year growth of 48% to 50%
- Net free cash flow of up to negative $24 million
These statements are forward-looking and actual results may differ materially. Refer to the “Forward-Looking Statements” section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
We have not reconciled net free cash flow guidance to net cash from operating activities for the full fiscal year 2019 because we do not provide guidance on the reconciling items between net cash from operating activities and net free cash flow, due to the uncertainty regarding, and the potential variability of, these items. The actual amount of such reconciling items will have a significant impact on our net free cash flow and, accordingly, a reconciliation of net cash from operating activities to net free cash flow for the full fiscal year 2019 is not available without unreasonable effort. We do not provide reconciliation of calculated billings guidance as its components are solely revenues and deferred revenues, and guidance for revenues is already provided.
Conference Call Information
Smartsheet will host a conference call and live webcast for analysts and investors at 1:30 p.m. Pacific Time on September 4, 2018. A live webcast and accompanying presentation can be accessed on the Investor Relations section of the Company website at: https://investors.smartsheet.com. The conference call can also be accessed by dialing (877) 274-9243, or +1 (647) 689-5417 (outside of the US). The conference ID is 4757427. A replay of the call via webcast will be available at https://investors.smartsheet.com or by dialing (800) 585-8367 or +1 (416) 621-4642 (outside of the US). The dial-in replay will be available until the end of day on September 11, 2018. The webcast replay will be available for one year.
Forward-Looking Statements
This press release contains “forward-looking” statements that are based on our management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include, but are not limited to, statements about Smartsheet’s outlook for the fiscal quarter ending October 31, 2018 and the full fiscal year ending January 31, 2019, and Smartsheet’s expectations regarding possible or assumed business strategies, potential growth and innovation opportunities, new products, and potential market opportunities.
Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “believe,” “continue,” “could,” “potential,” “remain,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to, risks and uncertainties related to: our ability to achieve future growth and sustain our growth rate, our ability to attract and retain customers and increase sales to our customers, our ability to develop and release new products and services and to scale our platform, our ability to increase adoption of our platform through our self-service model, our ability to maintain and grow our relationships with strategic partners, the highly competitive and rapidly evolving market in which we participate, our ability to identify targets for, execute on, or realize the benefits of, potential acquisitions, and our international expansion strategies. Further information on risks that could cause actual results to differ materially from forecasted results is included in our filings with the SEC, including our Quarterly Report on Form 10-Q for the period ended July 31, 2018 to be filed with the SEC by September 14, 2018. Any forward-looking statements contained in this press release are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.
Use of Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP measures can be found in the accompanying financial statements included with this press release.
We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP financial metrics to assist investors in seeing our financial performance through the eyes of management, and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.
We define non-GAAP operating loss as GAAP loss from operations excluding share-based compensation expense, amortization of acquisition-related intangible assets, and one-time costs associated with mergers and acquisitions. Non-GAAP net loss, which is used in calculating non-GAAP net loss per share, also excludes expense associated with revaluation of convertible preferred stock warrant liability. There are a number of limitations related to the use of these non-GAAP measures as compared to GAAP operating loss and net loss, including that the non-GAAP measures exclude share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy.
We use the non-GAAP financial measure of net free cash flow, which is defined as GAAP net cash flows from operating activities, reduced by cash used for purchases of property and equipment (inclusive of spend on internal-use software) and principal payments on capital lease obligations. We believe net free cash flow is an important liquidity measure of the cash that is available, after capital expenditures and operational expenses, for investment in our business and to make acquisitions. Net free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth. There are a number of limitations related to the use of net free cash flow as compared to net cash from operating activities, including that net free cash flow includes capital expenditures, the benefits of which are realized in periods subsequent to those when expenditures are made.
Definitions of Business Metrics
Number of domain-based customers
We define domain-based customers as organizations with a unique email domain name such as @cisco and @paypal. All other customers, which we designate as ISP customers, are typically small teams or individuals who register for our services with an email address hosted on a widely used domain such as @gmail, @outlook, or @yahoo.
Average ACV per domain-based customer
We define average ACV per domain-based customer as total outstanding ACV for domain-based subscriptions as of the end of the reporting period divided by the number of domain-based customers as of the same date.
Dollar-based net retention rate
We calculate dollar-based net retention rate as of a period end by starting with the ACV from the cohort of all customers as of the 12 months prior to such period end, or Prior Period ACV. We then calculate the ACV from these same customers as of the current period end, or Current Period ACV. Current Period ACV includes any upsells and is net of contraction or attrition over the trailing 12 months, but excludes subscription revenue from new customers in the current period. We then divide the total Current Period ACV by the total Prior Period ACV to arrive at the dollar-based net retention rate.
About Smartsheet
Smartsheet is a leading cloud-based platform for work execution, enabling teams and organizations to plan, capture, manage, automate, and report on work at scale, resulting in more efficient processes and better business outcomes. Today over 93,000 customers, including more than 75,000 domain-based customers, rely on Smartsheet to implement, manage, and automate processes across a broad array of departments and use cases.
Disclosure of Material Information
Smartsheet announces material information to its investors using SEC filings, press releases, public conference calls, and on its investor relations page of the company’s website at https://investors.smartsheet.com.
| SMARTSHEET INC. | ||||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| Revenue | ||||||||||||||||||||
| Subscription | $ | 37,470 | $ | 23,796 | $ | 69,528 | $ | 44,171 | ||||||||||||
| Professional services | 4,914 | 2,871 | 9,175 | 4,732 | ||||||||||||||||
| Total revenue | 42,384 | 26,667 | 78,703 | 48,903 | ||||||||||||||||
| Cost of revenue | ||||||||||||||||||||
| Subscription | 4,588 | 3,433 | 8,824 | 6,422 | ||||||||||||||||
| Professional services | 3,567 | 1,944 | 6,654 | 3,452 | ||||||||||||||||
| Total cost of revenue | 8,155 | 5,377 | 15,478 | 9,874 | ||||||||||||||||
| Gross profit | 34,229 | 21,290 | 63,225 | 39,029 | ||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Research and development | 14,412 | 12,588 | 27,257 | 19,096 | ||||||||||||||||
| Sales and marketing | 24,255 | 17,367 | 46,639 | 32,116 | ||||||||||||||||
| General and administrative | 8,524 | 14,046 | 15,322 | 17,725 | ||||||||||||||||
| Total operating expenses | 47,191 | 44,001 | 89,218 | 68,937 | ||||||||||||||||
| Loss from operations | (12,962 | ) | (22,711 | ) | (25,993 | ) | (29,908 | ) | ||||||||||||
| Interest income (expense) and other, net | 749 | (139 | ) | (550 | ) | (126 | ) | |||||||||||||
| Net loss before provision (benefit) for income taxes | $ | (12,213 | ) | $ | (22,850 | ) | $ | (26,543 | ) | $ | (30,034 | ) | ||||||||
| Provision (benefit) for income taxes | $ | 88 | $ | — | $ | 88 | $ | — | ||||||||||||
| Net loss | $ | (12,301 | ) | $ | (22,850 | ) | $ | (26,631 | ) | $ | (30,034 | ) | ||||||||
| Deemed dividend | $ | — | $ | (4,558 | ) | — | $ | (4,558 | ) | |||||||||||
| Net loss attributable to common shareholders | $ | (12,301 | ) | $ | (27,408 | ) | $ | (26,631 | ) | $ | (34,592 | ) | ||||||||
| Net loss per share attributable to common shareholders, basic and diluted | $ | (0.12 | ) | $ | (1.52 | ) | $ | (0.43 | ) | $ | (2.00 | ) | ||||||||
| Weighted-average shares outstanding used to compute net loss per share attributable to common shareholders, basic and diluted | 102,569 | 18,013 | 62,464 | 17,258 | ||||||||||||||||
Share-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands): | |||||||||||||||||||
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
| Cost of subscription revenue | $ | 84 | $ | 62 | $ | 118 | $ | 71 | |||||||||||
| Cost of professional services revenue | 150 | 20 | 197 | 32 | |||||||||||||||
| Research and development | 1,378 | 5,259 | 2,043 | 5,407 | |||||||||||||||
| Sales and marketing | 1,370 | 772 | 1,884 | 970 | |||||||||||||||
| General and administrative | 1,116 | 9,878 | 1,698 | 10,056 | |||||||||||||||
| Total share-based compensation | $ | 4,098 | $ | 15,991 | $ | 5,940 | $ | 16,536 | |||||||||||
SMARTSHEET INC. | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
| (in thousands, except share data) | ||||||||||
July 31, 2018 | January 31, 2018 | |||||||||
| (unaudited) | ||||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | 211,111 | $ | 58,158 | ||||||
| Accounts receivable, net of allowances of $687 and $457 at July 31, 2018 and January 31, 2018, respectively | 23,597 | 14,870 | ||||||||
| Prepaid expenses and other current assets | 5,879 | 4,628 | ||||||||
| Total current assets | 240,587 | 77,656 | ||||||||
| Long-term assets | ||||||||||
| Restricted cash | 2,297 | 2,901 | ||||||||
| Deferred commissions | 20,722 | 15,291 | ||||||||
| Property and equipment, net | 19,750 | 17,237 | ||||||||
| Intangible assets, net | 1,292 | 1,547 | ||||||||
| Goodwill | 532 | 445 | ||||||||
| Other long-term assets | 21 | 1,527 | ||||||||
| Total assets | $ | 285,201 | $ | 116,604 | ||||||
| Liabilities, convertible preferred stock, and shareholders’ deficit | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable | $ | 2,721 | $ | 2,641 | ||||||
| Accrued compensation and related benefits | 16,442 | 13,253 | ||||||||
| Other accrued liabilities | 5,125 | 3,061 | ||||||||
| Capital lease payable | 3,711 | 2,833 | ||||||||
| Deferred revenue | 76,024 | 57,102 | ||||||||
| Total current liabilities | 104,023 | 78,890 | ||||||||
| Capital lease payable, non-current | 3,890 | 3,713 | ||||||||
| Deferred revenue, non-current | 133 | 179 | ||||||||
| Convertible preferred stock warrant liability | — | 1,272 | ||||||||
| Other long-term liabilities | 728 | 604 | ||||||||
| Total liabilities | 108,774 | 84,658 | ||||||||
| Convertible preferred stock | ||||||||||
Convertible preferred stock, no par value; no shares authorized, issued and outstanding as of July 31, 2018; 67,756,647 shares authorized, 67,619,377 shares issued and outstanding with aggregate liquidation preference of $113,217 as of January 31, 2018 2018 | — | 112,687 | ||||||||
| Shareholders’ equity (deficit): | ||||||||||
Preferred stock, no par value; 10,000,000 shares authorized, no shares issued and outstanding as of July 31, 2018; no shares authorized, issued and outstanding as of January 31, 2018 | — | — | ||||||||
| Class A common stock, no par value; 500,000,000 shares authorized, 13,379,008 shares issued and outstanding as of July 31, 2018; no shares authorized, no shares issued and outstanding as of January 31, 2018 | — | — | ||||||||
| Class B common stock, no par value; 500,000,000 shares authorized, 89,273,987 shares issued and outstanding as of July 31, 2018; no shares authorized, no shares issued and outstanding as of January 31, 2018 | — | — | ||||||||
| Additional paid-in capital | 309,690 | 25,892 | ||||||||
| Accumulated deficit | (133,263 | ) | (106,633 | ) | ||||||
| Total shareholders’ equity (deficit) | 176,427 | (80,741 | ) | |||||||
Total liabilities, convertible preferred stock and shareholders’ equity (deficit) | $ | 285,201 | $ | 116,604 | ||||||
| SMARTSHEET INC. | ||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (in thousands) | ||||||||||
| (unaudited) | ||||||||||
| Six Months Ended July 31, | ||||||||||
| 2018 | 2017 | |||||||||
| Cash flows from operating activities | ||||||||||
| Net loss | $ | (26,631 | ) | $ | (30,034 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||
| Share-based compensation expense | 5,940 | 16,536 | ||||||||
| Remeasurement of convertible preferred stock warrant liability | 1,326 | 211 | ||||||||
| Depreciation of property and equipment | 3,173 | 1,623 | ||||||||
| Amortization of deferred commission costs | 4,452 | 1,925 | ||||||||
| Unrealized foreign currency (gain) loss | 66 | — | ||||||||
| Gain/loss on disposal of assets | — | 2 | ||||||||
| Amortization of intangible assets | 255 | 6 | ||||||||
Amortization of premiums, accretion of discounts, and gain on investments | — | 26 | ||||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | (8,747 | ) | (7,042 | ) | ||||||
| Prepaid expenses and other current assets | (1,767 | ) | (918 | ) | ||||||
| Other long-term assets | 50 | (16 | ) | |||||||
| Accounts payable | 597 | 614 | ||||||||
| Other accrued liabilities | 1,825 | 1,725 | ||||||||
| Accrued compensation and related benefits | 1,070 | 1,498 | ||||||||
| Deferred commissions | (9,882 | ) | (6,073 | ) | ||||||
| Other long-term liabilities | 124 | 268 | ||||||||
| Deferred revenue | 18,876 | 15,050 | ||||||||
| Net cash used in operating activities | (9,273 | ) | (4,599 | ) | ||||||
| Cash flows from investing activities | ||||||||||
| Purchases of property and equipment | (2,214 | ) | (3,099 | ) | ||||||
| Capitalized internal-use software development costs | (849 | ) | (1,477 | ) | ||||||
| Proceeds from sales of investments | — | 900 | ||||||||
| Proceeds from maturity of investments | — | 9,222 | ||||||||
| Proceeds from sale of computer equipment | — | 1 | ||||||||
| Net cash provided by (used in) investing activities | (3,063 | ) | 5,547 | |||||||
| Cash flows from financing activities | ||||||||||
| Proceeds from initial public offering, net of underwriters' discounts and commissions | 163,844 | — | ||||||||
| Payments on principal of capital lease | (1,584 | ) | (976 | ) | ||||||
| Payments of deferred offering costs | (2,263 | ) | — | |||||||
| Proceeds from issuance of convertible preferred stock | — | 51,927 | ||||||||
| Proceeds from exercise of stock options | 2,614 | 1,575 | ||||||||
| Proceeds from Employee Stock Purchase Plan | 2,118 | — | ||||||||
| Net cash provided by financing activities | 164,729 | 52,526 | ||||||||
| Effect of foreign exchange on cash, cash equivalents, and restricted cash | (44 | ) | — | |||||||
| Net increase in cash, cash equivalents, and restricted cash | 152,349 | 53,474 | ||||||||
| Cash, cash equivalents, and restricted cash | ||||||||||
| Beginning of period | 61,059 | 24,013 | ||||||||
| End of period | $ | 213,408 | $ | 77,488 | ||||||
| Supplemental disclosures | ||||||||||
| Cash paid for interest | $ | 161 | $ | 150 | ||||||
Purchases of fixed assets under capital lease | 2,639 | 789 | ||||||||
| Accrued purchases of property and equipment | 362 | 257 | ||||||||
| Deemed dividends on convertible preferred stock | — | (4,558 | ) | |||||||
| Deferred offering costs, accrued but not yet paid | 340 | — | ||||||||
| SMARTSHEET INC. | ||||||||||||||||||||
| Reconciliation from GAAP to Non-GAAP Financial Measures | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Reconciliation from GAAP to non-GAAP gross profit and gross margin | ||||||||||||||||||||
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Gross profit | $ | 34,229 | $ | 21,290 | $ | 63,225 | $ | 39,029 | ||||||||||||
| Add: | ||||||||||||||||||||
| Share-based compensation expense | 234 | 82 | 315 | 103 | ||||||||||||||||
| Amortization of acquisition-related intangible assets | 114 | — | 228 | — | ||||||||||||||||
| Non-GAAP gross profit | $ | 34,577 | $ | 21,372 | $ | 63,768 | $ | 39,132 | ||||||||||||
| Gross margin | 81 | % | 80 | % | 80 | % | 80 | % | ||||||||||||
| Non-GAAP gross margin | 82 | % | 80 | % | 81 | % | 80 | % | ||||||||||||
| Reconciliation from GAAP to non-GAAP operating loss and operating margin | ||||||||||||||||||||
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Loss from operations | $ | (12,962 | ) | $ | (22,711 | ) | $ | (25,993 | ) | $ | (29,908 | ) | ||||||||
| Add: | ||||||||||||||||||||
| Share-based compensation expense | 4,098 | 15,991 | 5,940 | 16,536 | ||||||||||||||||
| Amortization of acquisition-related intangible assets | 120 | — | 240 | — | ||||||||||||||||
| One-time costs of acquisition | 10 | — | 57 | — | ||||||||||||||||
| Non-GAAP operating loss | $ | (8,734 | ) | $ | (6,720 | ) | $ | (19,756 | ) | $ | (13,372 | ) | ||||||||
| Operating margin | (31 | )% | (85 | )% | (33 | )% | (61 | )% | ||||||||||||
| Non-GAAP operating margin | (21 | )% | (25 | )% | (25 | )% | (27 | )% | ||||||||||||
| Reconciliation from GAAP to non-GAAP net loss | ||||||||||||||||||||
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Net loss | $ | (12,301 | ) | $ | (22,850 | ) | $ | (26,631 | ) | $ | (30,034 | ) | ||||||||
| Add: | ||||||||||||||||||||
| Share-based compensation expense | 4,098 | 15,991 | 5,940 | 16,536 | ||||||||||||||||
| Amortization of acquisition-related intangible assets | 120 | — | 240 | — | ||||||||||||||||
| One-time costs of acquisition | 10 | — | 57 | — | ||||||||||||||||
| Remeasurement of convertible preferred stock warrant liability | — | 211 | 1,326 | 211 | ||||||||||||||||
| Non-GAAP net loss | $ | (8,073 | ) | $ | (6,648 | ) | $ | (19,068 | ) | $ | (13,287 | ) | ||||||||
| SMARTSHEET INC. | ||||||||||||
| Reconciliation from GAAP to Non-GAAP Financial Measures | ||||||||||||
| (unaudited) | ||||||||||||
| Reconciliation from GAAP to non-GAAP weighted average shares outstanding (basic and diluted) | ||||||||||||
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||
| (in thousands) | ||||||||||||
| GAAP weighted-average shares outstanding used in computing net loss per share attributable to common shareholders, basic and diluted | 102,569 | 18,013 | 62,464 | 17,258 | ||||||||
| Add: common shares that would have resulted from conversion of convertible preferred stock at the beginning of the period, or when granted (if later), on a weighted average basis | — | 67,192 | 33,673 | 64,710 | ||||||||
| Non-GAAP weighted-average shares outstanding used in computing net loss per share attributable to common shareholders, basic and diluted | 102,569 | 85,205 | 96,137 | 81,968 | ||||||||
Anti-dilutive shares | |||||
| July 31, | |||||
2018 | 2017 | ||||
| (in thousands) | |||||
| Convertible preferred shares (as converted) | — | 68,420 | |||
| Convertible preferred stock warrant | — | 137 | |||
| Shares subject to outstanding common stock awards | 15,466 | 11,934 | |||
| Shares issuable pursuant to the ESPP | 166 | — | |||
| Total potentially dilutive shares | 15,632 | 80,491 | |||
Reconciliation from net operating cash flow to net free cash flow | ||||||||||||||||||||
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | (1,119 | ) | $ | 652 | $ | (9,273 | ) | $ | (4,599 | ) | |||||||||
| Less: | ||||||||||||||||||||
| Purchases of property and equipment(1) | (2,253 | ) | (2,562 | ) | (3,063 | ) | (4,576 | ) | ||||||||||||
| Payments on capital lease obligations | (825 | ) | (491 | ) | (1,584 | ) | (976 | ) | ||||||||||||
| Free cash flow | $ | (4,197 | ) | $ | (2,401 | ) | $ | (13,920 | ) | $ | (10,151 | ) | ||||||||
| (1) | Includes amounts related to capitalized internal-use software development costs. | ||
| SMARTSHEET INC. | ||||||||||||||||
| Reconciliation from GAAP to Non-GAAP Financial Measures | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Reconciliation from revenue to calculated billings | ||||||||||||||||
| Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Total revenue | $ | 42,384 | $ | 26,667 | $ | 78,703 | $ | 48,903 | ||||||||
| Add: | ||||||||||||||||
| Deferred revenue (end of period) | 76,157 | 47,762 | 76,157 | 47,762 | ||||||||||||
| Less: | ||||||||||||||||
| Deferred revenue (beginning of period) | 66,341 | 40,812 | 57,281 | 32,712 | ||||||||||||
| Calculated billings | $ | 52,200 | $ | 33,617 | $ | 97,579 | $ | 63,953 | ||||||||
Reconciliation from GAAP to non-GAAP operating loss guidance | ||||||||||||||||||||
| Q3'19 | FY 2019 | |||||||||||||||||||
| Low | High | Low | High | |||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Loss from operations | $ | (21.6 | ) | $ | (20.6 | ) | $ | (72.6 | ) | $ | (68.6 | ) | ||||||||
| Add: | ||||||||||||||||||||
| Share-based compensation expense | 4.5 | 4.5 | 15.0 | 15.0 | ||||||||||||||||
| Amortization of acquisition-related intangible assets | 0.1 | 0.1 | 0.5 | 0.5 | ||||||||||||||||
| One-time costs of acquisition | — | — | 0.1 | 0.1 | ||||||||||||||||
| Non-GAAP operating loss | $ | (17.0 | ) | $ | (16.0 | ) | $ | (57.0 | ) | $ | (53.0 | ) | ||||||||
Reconciliation from GAAP to non-GAAP net loss guidance | ||||||||||||||||||||
| Q3'19 | FY 2019 | |||||||||||||||||||
| Low | High | Low | High | |||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Net loss | $ | (21.1 | ) | $ | (20.1 | ) | $ | (72.4 | ) | $ | (68.4 | ) | ||||||||
| Add: | ||||||||||||||||||||
| Share-based compensation expense | 4.5 | 4.5 | 15.0 | 15.0 | ||||||||||||||||
| Amortization of acquisition-related intangible assets | 0.1 | 0.1 | 0.5 | 0.5 | ||||||||||||||||
| One-time costs of acquisition | — | — | 0.1 | 0.1 | ||||||||||||||||
| Remeasurement of convertible preferred stock warrant liability | — | — | 1.3 | 1.3 | ||||||||||||||||
| Non-GAAP net loss | $ | (16.5 | ) | $ | (15.5 | ) | $ | (55.5 | ) | $ | (51.5 | ) | ||||||||
| SMARTSHEET INC. | ||||||||||||
| Reconciliation from GAAP to Non-GAAP Financial Measures | ||||||||||||
| (unaudited) | ||||||||||||
| Reconciliation from GAAP to non-GAAP weighted average shares outstanding (basic and diluted) guidance | ||||||||||||
| Q3'19 | FY 2019 | |||||||||||
| Low | High | Low | High | |||||||||
| (in millions) | ||||||||||||
| GAAP weighted-average shares outstanding used in computing net loss per share attributable to common shareholders, basic and diluted | 102.8 | 102.8 | 82.5 | 82.5 | ||||||||
| Add: common shares that would have resulted from conversion of convertible preferred stock at the beginning of the period, or when granted (if later), on a weighted average basis | — | — | 16.7 | 16.7 | ||||||||
| Non-GAAP weighted-average shares outstanding used in computing net loss per share attributable to common shareholders, basic and diluted | 102.8 | 102.8 | 99.2 | 99.2 | ||||||||
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