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: | December 3, 2018 |
• | Third quarter total revenue grew 59% year-over-year to $46.9 million |
• | Third quarter GAAP operating loss was $16.4 million, non-GAAP operating loss was $10.2 million |
• | Net operating cash flow was positive $2.4 million, net free cash flow was negative $2.0 million |
• | Revenue: Total revenue was $46.9 million, an increase of 59% year-over-year. Subscription revenue was $41.5 million, an increase of 57% year-over-year. Professional services revenue was $5.3 million, an increase of 81% year-over-year. |
• | Operating Loss: GAAP operating loss was $16.4 million, or 35% of total revenue, compared to GAAP operating loss of $10.5 million, or 36% of total revenue, in the third quarter of fiscal 2018. Non-GAAP operating loss was $10.2 million, or 22% of total revenue, compared to non-GAAP operating loss of $9.4 million, or 32% of total revenue, in the third quarter of fiscal 2018. |
• | Net Loss: GAAP net loss was $15.6 million, compared to GAAP net loss of $10.4 million in the third quarter of fiscal 2018. GAAP net loss per share was $0.15, compared to GAAP net loss per share of $0.54 in the third quarter of fiscal 2018. Non-GAAP net loss was $9.4 million, compared to non-GAAP net loss of $9.3 million in the third quarter of fiscal 2018. Non-GAAP net loss per share was $0.09, compared to non-GAAP net loss per share of $0.11 in the third quarter of fiscal 2018. |
• | Cash Flow: Net operating cash flow was positive $2.4 million, compared to net operating cash flow of negative $2.4 million in the third quarter of fiscal 2018. Net free cash flow was negative $2.0 million, compared to negative $5.2 million in the third quarter of fiscal 2018. |
• | Ended the quarter with 77,893 domain-based customers |
• | The number of all customers with annualized contract values (ACV) of $50,000 or more grew to 360, an increase of 148% year-over-year |
• | Average ACV per domain-based customer increased to $2,214, an increase of 48% year-over-year |
• | Dollar-based net retention rate was 132% |
• | Total revenue of $49.0 million to $50.0 million, representing year-over-year growth of 49% to 52% |
• | Non-GAAP operating loss of $16.0 million to $14.0 million |
• | Non-GAAP net loss per share of $0.15 to $0.13, assuming basic and diluted weighted average shares outstanding of approximately 103 million |
• | Total revenue of $174.6 million to $175.6 million, representing year-over-year growth of 57% to 58% |
• | Non-GAAP operating loss of $46.0 million to $44.0 million |
• | Non-GAAP net loss per share of $0.44 to $0.42, assuming basic and diluted weighted average shares outstanding of approximately 99.5 million |
• | Calculated billings of $210 million to $212 million, representing year-over-year growth of 55% to 56% |
• | Net free cash flow of up to negative $20 million |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | |||||||||||||||
Subscription | $ | 41,520 | $ | 26,441 | $ | 111,048 | $ | 70,612 | |||||||
Professional services | 5,348 | 2,947 | 14,523 | 7,678 | |||||||||||
Total revenue | 46,868 | 29,388 | 125,571 | 78,290 | |||||||||||
Cost of revenue | |||||||||||||||
Subscription | 4,873 | 3,278 | 13,697 | 9,700 | |||||||||||
Professional services | 3,831 | 2,385 | 10,485 | 5,837 | |||||||||||
Total cost of revenue | 8,704 | 5,663 | 24,182 | 15,537 | |||||||||||
Gross profit | 38,164 | 23,725 | 101,389 | 62,753 | |||||||||||
Operating expenses | |||||||||||||||
Research and development | 15,599 | 8,901 | 42,855 | 27,997 | |||||||||||
Sales and marketing | 30,084 | 20,726 | 76,723 | 52,841 | |||||||||||
General and administrative | 8,888 | 4,553 | 24,211 | 22,278 | |||||||||||
Total operating expenses | 54,571 | 34,180 | 143,789 | 103,116 | |||||||||||
Loss from operations | (16,407 | ) | (10,455 | ) | (42,400 | ) | (40,363 | ) | |||||||
Interest income (expense) and other, net | 860 | 97 | 310 | (29 | ) | ||||||||||
Net loss before provision (benefit) for income taxes | (15,547 | ) | (10,358 | ) | (42,090 | ) | (40,392 | ) | |||||||
Provision (benefit) for income taxes | 22 | — | 110 | — | |||||||||||
Net loss | $ | (15,569 | ) | $ | (10,358 | ) | $ | (42,200 | ) | $ | (40,392 | ) | |||
Deemed dividend | — | — | — | (4,558 | ) | ||||||||||
Net loss attributable to common shareholders | $ | (15,569 | ) | $ | (10,358 | ) | $ | (42,200 | ) | $ | (44,950 | ) | |||
Net loss per share attributable to common shareholders, basic and diluted | $ | (0.15 | ) | $ | (0.54 | ) | $ | (0.55 | ) | $ | (2.51 | ) | |||
Weighted-average shares outstanding used to compute net loss per share attributable to common shareholders, basic and diluted | 102,822 | 19,101 | 76,065 | 17,879 |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of subscription revenue | $ | 96 | $ | 13 | $ | 214 | $ | 85 | |||||||
Cost of professional services revenue | 149 | 17 | 346 | 49 | |||||||||||
Research and development | 2,552 | 370 | 4,596 | 5,777 | |||||||||||
Sales and marketing | 1,973 | 408 | 3,856 | 1,377 | |||||||||||
General and administrative | 1,274 | 240 | 2,972 | 10,295 | |||||||||||
Total share-based compensation | $ | 6,044 | $ | 1,048 | $ | 11,984 | $ | 17,583 |
October 31, 2018 | January 31, 2018 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 212,028 | $ | 58,158 | |||
Accounts receivable, net of allowances of $876 and $457 at October 31, 2018 and January 31, 2018, respectively | 23,815 | 14,870 | |||||
Prepaid expenses and other current assets | 5,660 | 4,628 | |||||
Total current assets | 241,503 | 77,656 | |||||
Long-term assets | |||||||
Restricted cash | 2,435 | 2,901 | |||||
Deferred commissions | 24,349 | 15,291 | |||||
Property and equipment, net | 21,804 | 17,237 | |||||
Intangible assets, net | 1,165 | 1,547 | |||||
Goodwill | 532 | 445 | |||||
Other long-term assets | 21 | 1,527 | |||||
Total assets | $ | 291,809 | $ | 116,604 | |||
Liabilities, convertible preferred stock, and shareholders’ equity (deficit) | |||||||
Current liabilities | |||||||
Accounts payable | $ | 3,041 | $ | 2,641 | |||
Accrued compensation and related benefits | 19,039 | 13,253 | |||||
Other accrued liabilities | 6,108 | 3,061 | |||||
Capital leases payable | 3,632 | 2,833 | |||||
Deferred revenue | 83,906 | 57,102 | |||||
Total current liabilities | 115,726 | 78,890 | |||||
Capital leases payable, non-current | 3,032 | 3,713 | |||||
Deferred revenue, non-current | 245 | 179 | |||||
Convertible preferred stock warrant liability | — | 1,272 | |||||
Other long-term liabilities | 1,192 | 604 | |||||
Total liabilities | 120,195 | 84,658 |
Convertible preferred stock | |||||||
Convertible preferred stock, no par value; no shares authorized, issued, or outstanding as of October 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 or outstanding as of October 31, 2018; no shares authorized, issued, or outstanding as of January 31, 2018 | — | — | |||||
Common stock, no par value; no shares authorized, issued, or outstanding as of October 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, 28,866,909 shares issued and outstanding as of October 31, 2018; no shares authorized, issued, or outstanding as of January 31, 2018 | — | — | |||||
Class B common stock, no par value; 500,000,000 shares authorized, 74,448,862 shares issued and outstanding as of October 31, 2018; no shares authorized, issued, or outstanding as of January 31, 2018 | — | — | |||||
Additional paid-in capital | 320,445 | 25,892 | |||||
Accumulated deficit | (148,831 | ) | (106,633 | ) | |||
Total shareholders’ equity (deficit) | 171,614 | (80,741 | ) | ||||
Total liabilities, convertible preferred stock, and shareholders’ equity (deficit) | $ | 291,809 | $ | 116,604 |
Nine Months Ended October 31, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities | |||||||
Net loss | $ | (42,200 | ) | $ | (40,392 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Share-based compensation expense | 11,984 | 17,583 | |||||
Remeasurement of convertible preferred stock warrant liability | 1,326 | 211 | |||||
Depreciation of property and equipment | 5,060 | 2,657 | |||||
Amortization of deferred commission costs | 7,342 | 3,293 | |||||
Unrealized foreign currency (gain) loss | 115 | — | |||||
Gain/loss on disposal of assets | — | 2 | |||||
Amortization of intangible assets | 382 | 10 | |||||
Amortization of premiums, accretion of discounts and gain on investments | — | 26 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (8,980 | ) | (5,581 | ) | |||
Prepaid expenses and other current assets | (1,510 | ) | (751 | ) | |||
Other long-term assets | 49 | (22 | ) | ||||
Accounts payable | 941 | 1,175 | |||||
Other accrued liabilities | 2,792 | 2,068 | |||||
Accrued compensation and related benefits | 4,791 | 4,135 | |||||
Deferred commissions | (16,400 | ) | (9,927 | ) | |||
Other long-term liabilities | 588 | 364 | |||||
Deferred revenue | 26,870 | 18,183 | |||||
Net cash used in operating activities | (6,850 | ) | (6,966 | ) | |||
Cash flows from investing activities | |||||||
Purchases of property and equipment | (4,372 | ) | (4,080 | ) | |||
Capitalized internal-use software development costs | (2,156 | ) | (2,681 | ) | |||
Proceeds from sales of investments | — | 899 | |||||
Proceeds from maturity of investments | — | 9,222 | |||||
Proceeds from sale of computer equipment | — | 1 | |||||
Purchases of intangible assets | — | (125 | ) | ||||
Net cash provided by (used in) investing activities | (6,528 | ) | 3,236 | ||||
Cash flows from financing activities | |||||||
Proceeds from initial public offering, net of underwriters' discounts and commissions | 163,844 | — | |||||
Payments on principal of capital leases | (2,520 | ) | (1,577 | ) | |||
Payments of deferred offering costs | (2,388 | ) | — | ||||
Proceeds from issuance of convertible preferred stock | — | 52,177 | |||||
Proceeds from exercise of stock options | 3,087 | 1,692 | |||||
Proceeds from Employee Stock Purchase Plan | 4,832 | — | |||||
Net cash provided by financing activities | 166,855 | 52,292 | |||||
Effect of foreign exchange on cash, cash equivalents, and restricted cash | (73 | ) | — | ||||
Net increase in cash, cash equivalents, and restricted cash | 153,404 | 48,562 | |||||
Cash, cash equivalents, and restricted cash | |||||||
Beginning of period | 61,059 | 24,013 | |||||
End of period | $ | 214,463 | $ | 72,575 | |||
Supplemental disclosures | |||||||
Cash paid for interest | $ | 257 | $ | 247 | |||
Purchases of fixed assets under capital leases | 2,639 | 789 | |||||
Accrued purchases of property and equipment (including internal-use software) | 480 | 55 | |||||
Deemed dividends on convertible preferred stock | — | (4,558 | ) | ||||
Deferred offering costs, accrued but not yet paid | 215 | — | |||||
Share-based compensation capitalized in internal-use software development costs | 114 | — |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(dollars in thousands) | |||||||||||||||
Gross profit | $ | 38,164 | $ | 23,725 | $ | 101,389 | $ | 62,753 | |||||||
Add: | |||||||||||||||
Share-based compensation expense(1) | 245 | 30 | 560 | 134 | |||||||||||
Amortization of acquisition-related intangible assets | 114 | — | 342 | — | |||||||||||
Non-GAAP gross profit | $ | 38,523 | $ | 23,755 | $ | 102,291 | $ | 62,887 | |||||||
Gross margin | 81 | % | 81 | % | 81 | % | 80 | % | |||||||
Non-GAAP gross margin | 82 | % | 81 | % | 81 | % | 80 | % |
(1) | Share-based compensation expense for the nine months ended October 31, 2017 includes share-based compensation expense related to the 2017 Tender Offer. |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(dollars in thousands) | |||||||||||||||
Loss from operations | $ | (16,407 | ) | $ | (10,455 | ) | $ | (42,400 | ) | $ | (40,363 | ) | |||
Add: | |||||||||||||||
Share-based compensation expense(1) | 6,044 | 1,048 | 11,984 | 17,583 | |||||||||||
Amortization of acquisition-related intangible assets | 120 | — | 360 | — | |||||||||||
One-time costs of acquisition | — | — | 57 | — | |||||||||||
Non-GAAP operating loss | $ | (10,243 | ) | $ | (9,407 | ) | $ | (29,999 | ) | $ | (22,780 | ) | |||
Operating margin | (35 | )% | (36 | )% | (34 | )% | (52 | )% | |||||||
Non-GAAP operating margin | (22 | )% | (32 | )% | (24 | )% | (29 | )% |
(1) | Share-based compensation expense for the nine months ended October 31, 2017 includes share-based compensation expense related to the 2017 Tender Offer. |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Net loss | $ | (15,569 | ) | $ | (10,358 | ) | $ | (42,200 | ) | $ | (40,392 | ) | |||
Add: | |||||||||||||||
Share-based compensation expense(1) | 6,044 | 1,048 | 11,984 | 17,583 | |||||||||||
Amortization of acquisition-related intangible assets | 120 | — | 360 | — | |||||||||||
One-time costs of acquisition | — | — | 57 | — | |||||||||||
Remeasurement of convertible preferred stock warrant liability | — | — | 1,326 | 211 | |||||||||||
Non-GAAP net loss | $ | (9,405 | ) | $ | (9,310 | ) | $ | (28,473 | ) | $ | (22,598 | ) |
(1) | Share-based compensation expense for the nine months ended October 31, 2017 includes share-based compensation expense related to the 2017 Tender Offer. |
Three Months Ended October 31, | Nine Months Ended October 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 | 102,822 | 19,101 | 76,065 | 17,879 | |||||||
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 | — | 68,420 | 22,325 | 65,961 | |||||||
Non-GAAP weighted-average shares outstanding used in computing net loss per share attributable to common shareholders, basic and diluted | 102,822 | 87,521 | 98,390 | 83,840 |
October 31, | |||||
2018 | 2017 | ||||
(in thousands) | |||||
Convertible preferred shares (as converted) | — | 68,420 | |||
Convertible preferred stock warrant | — | 137 | |||
Shares subject to outstanding common stock awards | 14,943 | 13,644 | |||
Shares issuable pursuant to the Employee Stock Purchase Plan | 59 | — | |||
Total potentially dilutive shares | 15,002 | 82,201 |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Net cash provided by (used in) operating activities | $ | 2,423 | $ | (2,367 | ) | $ | (6,850 | ) | $ | (6,966 | ) | ||||
Less: | |||||||||||||||
Purchases of property and equipment | (2,158 | ) | (981 | ) | (4,372 | ) | (4,080 | ) | |||||||
Capitalized internal-use software | (1,307 | ) | (1,204 | ) | (2,156 | ) | (2,681 | ) | |||||||
Payments on capital lease obligations | (936 | ) | (601 | ) | (2,520 | ) | (1,577 | ) | |||||||
Free cash flow | $ | (1,978 | ) | $ | (5,153 | ) | $ | (15,898 | ) | $ | (15,304 | ) |
Three Months Ended October 31, | Nine Months Ended October 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Total revenue | $ | 46,868 | $ | 29,388 | $ | 125,571 | $ | 78,290 | |||||||
Add: | |||||||||||||||
Deferred revenue (end of period) | 84,151 | 50,895 | 84,151 | 50,895 | |||||||||||
Less: | |||||||||||||||
Deferred revenue (beginning of period) | 76,157 | 47,762 | 57,281 | 32,712 | |||||||||||
Calculated billings | $ | 54,862 | $ | 32,521 | $ | 152,441 | $ | 96,473 |
Q4'19 | FY 2019 | ||||||||||||
Low | High | Low | High | ||||||||||
(in millions) | |||||||||||||
Loss from operations | $ | (21.1 | ) | $ | (19.1 | ) | $ | (63.6 | ) | $ | (61.6 | ) | |
Add: | |||||||||||||
Share-based compensation expense | 5.0 | 5.0 | 17.0 | 17.0 | |||||||||
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 | $ | (16.0 | ) | $ | (14.0 | ) | $ | (46.0 | ) | $ | (44.0 | ) |
Q4'19 | FY 2019 | ||||||||||||
Low | High | Low | High | ||||||||||
(in millions) | |||||||||||||
Net loss | $ | (20.6 | ) | $ | (18.6 | ) | $ | (62.9 | ) | $ | (60.9 | ) | |
Add: | |||||||||||||
Share-based compensation expense | 5.0 | 5.0 | 17.0 | 17.0 | |||||||||
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 | $ | (15.5 | ) | $ | (13.5 | ) | $ | (44.0 | ) | $ | (42.0 | ) |
Q4'19 | FY 2019 | ||||
(in millions) | |||||
GAAP weighted-average shares outstanding used in computing net loss per share attributable to common shareholders, basic and diluted | 103.0 | 82.8 | |||
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 | |||
Non-GAAP weighted-average shares outstanding used in computing net loss per share attributable to common shareholders, basic and diluted | 103.0 | 99.5 |