Smartsheet(US:SMAR)2024-12-05 21:32Revenue and Growth - Annualized recurring revenue (ARR) increased to $1,133 million as of October 31, 2024, up from $981 million in the previous year[148]. - Average ARR per domain-based customer rose to $10,708, compared to $9,225 a year ago[148]. - The number of customers with ARR of $100,000 or more increased to 2,137, up from 1,779[148]. - Subscription revenue increased by $41.2 million, or 18%, for the three months ended October 31, 2024, compared to the same period in 2023, driven by capabilities-based products and user-based subscription plans[173]. - Total revenue for the three months ended October 31, 2024, was $286.9 million, representing a 17% increase from $245.9 million in the same period of 2023[172]. Profitability and Expenses - Gross profit for the three months ended October 31, 2024, was $233.1 million, a 17% increase from $198.9 million in the same period of 2023[179]. - Total operating expenses for the three months ended October 31, 2024, were $236.5 million, slightly up from $234.3 million in the same period of 2023[179]. - Net income for the three months ended October 31, 2024, was $1.3 million, compared to a net loss of $32.4 million in the same period of 2023[171]. - Subscription cost of revenue increased by $7.2 million, or 21%, for the three months ended October 31, 2024, primarily due to increased hosting fees and employee-related expenses[180]. - General and administrative expenses increased by $14.8 million, or 14%, primarily due to one-time acquisition-related costs[195]. Cash Flow and Investments - Net cash provided by operating activities for the nine months ended October 31, 2024, was $172.8 million, an increase of $74.6 million compared to $98.2 million for the same period in 2023[217]. - Net cash provided by investing activities during the nine months ended October 31, 2024, was $38.6 million, a change of $142.0 million from net cash used in investing activities of $103.4 million in 2023[218]. - Net cash used in financing activities for the nine months ended October 31, 2024, was $39.7 million, a decrease of $55.0 million compared to net cash provided by financing activities of $15.4 million in 2023, primarily due to share repurchases[219]. - The company authorized a stock repurchase program of up to $150.0 million, with $9.7 million spent on repurchasing 0.2 million shares at an average price of $46.05 per share during the three months ended October 31, 2024[213]. Future Outlook and Economic Factors - The company entered into a Merger Agreement with affiliates of Blackstone, Vista, and ADIA, with each share of Class A common stock to be converted into cash of $56.50[138][139]. - The Merger is expected to close in the fourth quarter of the fiscal year ending January 31, 2025, subject to customary closing conditions[143]. - The company anticipates operating expenses to increase in absolute dollars but decrease as a percentage of total revenue over the long term due to economies of scale[164]. - Macroeconomic conditions, including interest rate fluctuations and inflation, may significantly influence the company's results of operations[145]. Financial Position and Risks - Cash and cash equivalents amounted to $454.3 million, with short-term investments totaling $306.6 million as of October 31, 2024[206]. - Deferred revenue as of October 31, 2024, totaled $560.4 million, with $556.3 million expected to be recognized as revenue in the next 12 months[208]. - The company does not believe that a hypothetical increase of 100 basis points in interest rates would have a material impact on the value of its cash equivalents or short-term investments[227]. - The company has foreign currency risks related to revenue and expenses denominated in currencies other than the U.S. dollar, but does not expect a 10% change in currency value to materially affect operating results[228]. - The company may seek additional equity or debt financing in the future to meet capital requirements, which could affect its ability to compete successfully if not raised on acceptable terms[212].