Washington | 001-38464 | 20-2954357 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
10500 NE 8th Street, Suite 1300 |
Bellevue, WA 98004 |
(Address of principal executive offices and zip code) |
(844) 324-2360 |
(Registrant’s telephone number, including area code) |
Exhibit No. | Description | ||
99.1 |
SMARTSHEET INC. | |||
By: | /s/ Jennifer E. Ceran | ||
Name: | Jennifer E. Ceran | ||
Title: | Chief Financial Officer | ||
Date: | September 4, 2018 |
• | Second quarter total revenue grew 59% year-over-year to $42.4 million |
• | Second quarter GAAP operating loss was $13.0 million, non-GAAP operating loss was $8.7 million |
• | Net operating cash flow was negative $1.1 million, net free cash flow was negative $4.2 million |
• | 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. |
(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. |
• | 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% |
• | 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 |
• | 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 |
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 |
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 |
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, or 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 | — | 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, or outstanding as of January 31, 2018 | — | — | |||||
Common stock, no par value; no shares authorized, no shares issued and outstanding as of July 31, 2018; 107,679,381 shares authorized, 20,280,741 shares 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 |
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 | — |
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 | % |
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 | )% |
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 | ) |
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 |
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 |
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. |
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 |
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 | ) |
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 | ) |
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 |