Smartsheet(US:SMAR)2023-09-07 16:00Revenue Growth - Subscription revenue for Q2 2023 reached $221.5 million, up from $173.5 million in Q2 2022, representing a year-over-year growth of 27.6%[133] - The total revenue for the six months ended July 31, 2023, was $455.5 million, compared to $355.0 million for the same period in 2022, reflecting a growth of 28.3%[133] - Total revenue for the three months ended July 31, 2023, was $235.6 million, a 26% increase from $186.7 million in the same period of 2022[136] - Total subscription revenue for the six months ended July 31, 2023, was $427.5 million, a 30% increase from $328.8 million in the same period of 2022[150] Customer Metrics - The dollar-based net retention rate for all customers was 121% for the trailing 12 months, down from 131% in the previous year[116] - The average annualized contract value (ACV) per domain-based customer increased to $8,863 in July 2023, compared to $7,557 in July 2022, marking a growth of 17.3%[116] - The number of customers with annualized contract values of $100,000 or more increased to 1,665, up from 1,220 in the previous year, indicating a growth of 36.5%[116] Profitability - Gross profit for Q2 2023 was $188.5 million, resulting in a gross margin of 80%, compared to 78% in Q2 2022[133] - Gross profit for the three months ended July 31, 2023, was $188.5 million, representing a 29% increase from $146.1 million in 2022[138] - Non-GAAP gross profit for the six months ended July 31, 2023, was $376.9 million, compared to $289.2 million in 2022, with a non-GAAP gross margin of 83%[167] Operating Expenses - Total operating expenses for the six months ended July 31, 2023, were $430.8 million, compared to $412.0 million for the same period in 2022, reflecting an increase of 4.5%[133] - Research and development expenses for Q2 2023 were $58.4 million, representing 25% of total revenue, down from 29% in Q2 2022[135] - Sales and marketing expenses for Q2 2023 were $129.8 million, accounting for 55% of total revenue, a decrease from 66% in Q2 2022[135] - Research and development expenses increased by $8.2 million, or 8%, to $114.5 million for the six months ended July 31, 2023, compared to $106.3 million in the same period of 2022[157] - Sales and marketing expenses rose by $5.4 million, or 2%, totaling $244.8 million for the six months ended July 31, 2023, compared to $239.4 million in 2022[158] - General and administrative expenses increased by $5.3 million, or 8%, reaching $71.5 million for the six months ended July 31, 2023, compared to $66.2 million in 2022[159] Net Loss and Income - The net loss for Q2 2023 was $33.4 million, an improvement from a net loss of $62.3 million in Q2 2022[133] - The company experienced a net loss of $63.2 million during the six months ended July 31, 2023, adjusted for non-cash charges of $145.0 million[189] - Non-GAAP operating income for the six months ended July 31, 2023, was $42.0 million, compared to a loss of $39.2 million in 2022, with a non-GAAP operating margin of 9%[169] - Non-GAAP net income for the six months ended July 31, 2023, was $47.1 million, compared to a loss of $37.3 million in 2022[173] Cash Flow and Investments - Free cash flow for the six months ended July 31, 2023, was $76.8 million, compared to a negative free cash flow of $1.96 million in 2022[176] - Net cash provided by operating activities for the six months ended July 31, 2023, was $83.0 million, compared to $5.2 million used in the same period of 2022[187] - Net cash used in investing activities for the six months ended July 31, 2023, was $79.8 million, primarily due to purchases of short-term investments totaling $248.5 million[192] - Cash and cash equivalents, along with short-term investments, totaled $549.0 million as of July 31, 2023[201] Interest Income - Interest income surged by $4.6 million, or 356%, to $5.8 million, primarily due to the performance of short-term investments[147] - Interest income surged by $9.4 million, or 563%, to $11.1 million for the six months ended July 31, 2023, compared to $1.7 million in the same period of 2022[160] Deferred Revenue and Billings - Calculated billings for the six months ended July 31, 2023, were $458.7 million, up 19.0% from $385.7 million in the same period of 2022[180] - Deferred revenue as of July 31, 2023, was $462.9 million, with $461.2 million expected to be recognized as revenue in the next 12 months[183] Tax Provisions - The income tax provision increased by $2.6 million, or 736%, to $3.0 million, influenced by U.S. BEAT and state income taxes[149] - The income tax provision increased by $4.9 million, or 847%, to $5.4 million for the six months ended July 31, 2023, compared to $574,000 in 2022[162] Foreign Currency Risks - The company faces foreign currency exchange risks related to revenue and expenses denominated in currencies such as the British pound, Australian dollar, Canadian dollar, and euro[204] - A 10% increase or decrease in the relative value of the U.S. dollar to other currencies is not expected to have a material effect on the company's operating results[204] - The company has experienced fluctuations in net income due to transaction gains or losses from remeasuring certain asset and liability balances in foreign currencies[205] - The company has not engaged in hedging foreign currency transactions to date, relying on inflows to cover outflows[205] - Future derivative or hedging transactions may be considered if exposure to foreign currency becomes more significant[205]