NEWS RELEASE

# Smartsheet Inc. Announces First Quarter Fiscal Year 2024 Results

6/7/2023

First quarter total revenue grew 31% year over year to $219.9 million

First quarter operating cash îow of $34.6 million and free cash îow of $31.3 million

Ended the quarter with cash, cash equivalents, and short-term investments of $489.5 million

BELLEVUE, Wash.--(BUSINESS WIRE)-- Smartsheet Inc. (NYSE: SMAR), the enterprise platform for modern work

management, today announced ínancial results for its írst íscal quarter ended April 30, 2023.

“Our íscal year is oì to a solid start,” said Mark Mader, President and CEO of Smartsheet. “We continued to drive

growth this quarter, exceeding our guidance on both the top and bottom line. We are seeing strong demand from

our enterprise customers, who continue to choose Smartsheet to help them accomplish their mission critical work

and solve their toughest problems. Looking ahead, we’re planning to expand the AI-based capabilities in our

platform to help our customers unlock new, higher value work.”

First Quarter Fiscal 2024 Financial Highlights

Revenue: Total revenue was $219.9 million, an increase of 31% year over year. Subscription revenue was

$206.0 million, an increase of 33% year over year. Professional services revenue was $13.9 million, an

increase of 7% year over year.

Operating Income (Loss): GAAP operating loss was $(32.1) million, or (15)% of total revenue, compared to

$(69.8) million, or (41)% of total revenue, in the írst quarter of íscal 2023. Non-GAAP operating income was

$22.8 million, or 10% of total revenue, compared to non-GAAP operating loss of $(23.1) million, or (14)% of

total revenue, in the írst quarter of íscal 2023.


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Net Income (Loss): GAAP net loss was $(29.9) million, compared to GAAP net loss of $(70.5) million in the írst

quarter of íscal 2023. GAAP net loss per share was $(0.23), compared to GAAP net loss per share of $(0.55) in

the írst quarter of íscal 2023. Non-GAAP net income was $25.0 million, compared to non-GAAP net loss of

$(23.7) million in the írst quarter of íscal 2023. Non-GAAP basic and diluted net income per share was $0.19

and $0.18, compared to non-GAAP basic and diluted net loss per share of $(0.18) in the írst quarter of íscal

2023.

Cash Flow: Netoperating cash îow was $34.6 million, compared to $(5.1) million in the írst quarter of íscal

2023. Free cash îow was $31.3 million, compared to $(9.1) million in the írst quarter of íscal 2023.

First Quarter Fiscal 2024 Operational Highlights

Calculated billings were $215.5 million, representing year-over-year growth of 20%

Dollar-based net retention rate was 123%

Number of all customers with annualized contract values ("ACV") of $100,000 or more grew to 1,569, an

increase of 42% year over year

Number of all customers with ACV of $50,000 or more grew to 3,343, an increase of 33% year over year

Number of all customers with ACV of $5,000 or more grew to 18,483, an increase of 16% year over year

Average ACV per domain-based customer increased to $8,520, an increase of 18% year over year

First Quarter Fiscal 2024 Business Highlights

Launched Free Plan, which lets individuals and small teams get started with task and project management in

Smartsheet for free

Released new dashboard features that will make customers’ dashboards more informative, visually appealing,

and on brand

Enabled Control Center to support multiple thousands of projects, and we're on track to be able to support

multiple tens-of-thousands of projects per Control Center instance by the end of the íscal year in January

Named to Fast Company’s annual list of the World’s Most Innovative Companies, ranking in the top ten of the

Enterprise category

The section titled "Use of Non-GAAP Financial Measures" below contains a description of the non-GAAP ínancial

measures with a reconciliation between GAAP and non-GAAP information. The section titled "Deínitions of

Business Metrics" contains deínitions of certain non-ínancial metrics provided within this earnings release.

Financial Outlook

For the second quarter of íscal year 2024, the Company currently expects:


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Total revenue of $228 million to $231 million, representing year-over-year growth of 22% to 24%

Non-GAAP operating income of $7 million to $9 million

Non-GAAP net income per share of $0.07 to $0.08, assuming diluted weighted average shares outstanding of

approximately 138.5 million

For the full íscal year 2024, the Company currently expects:

Total revenue of $943 million to $948 million, representing year-over-year growth of 23% to 24%

Non-GAAP operating income of $43 million to $53 million

Non-GAAP net income per share of $0.37 to $0.44, assuming diluted weighted average shares outstanding of

approximately 139.0 million

Calculated billings year-over-year growth of 20%

Free cash îow of $110 million

We have not reconciled free cash îow guidance to net cash from operating activities because we do not provide

guidance on the reconciling items between net cash from operating activities and free cash îow, due to the

uncertainty regarding, and the potential variability of, these items. The actual amount of such reconciling items will

have a signiícant impact on our free cash îow. Accordingly, a reconciliation of net cash from operating activities to

free cash îow guidance is not available without unreasonable eìort. We do not provide reconciliation of calculated

billings guidance as its components are solely revenue and deferred revenue, and guidance for revenue is already

provided.

Conference Call Information

Smartsheet will host a conference call and live webcast for analysts and investors at 1:30 p.m. Paciíc Time on June

7, 2023. A live webcast and accompanying presentation can be accessed on the Investor Relations section of the

[Company's website at: https://investors.smartsheet.com. The conference call can also be accessed by dialing (888)](https://cts.businesswire.com/ct/CT?id=smartlink&url=https%3A%2F%2Finvestors.smartsheet.com&esheet=53416473&newsitemid=20230607005712&lan=en-US&anchor=https%3A%2F%2Finvestors.smartsheet.com&index=1&md5=95cd56970b8c8491db27d7336a5d965f)

440-6385, or +1 (646) 960-0180 (outside of the US). The conference ID is 7672979. A replay of the call via webcast

[will be available at https://investors.smartsheet.com or by dialing (800) 770-2030 or +1 (647) 362-9199 (outside of](https://cts.businesswire.com/ct/CT?id=smartlink&url=https%3A%2F%2Finvestors.smartsheet.com&esheet=53416473&newsitemid=20230607005712&lan=en-US&anchor=https%3A%2F%2Finvestors.smartsheet.com&index=2&md5=d1cb7d503ae6301c06feaf0b893be40b)

the US). The dial-in replay will be available until the end of day on June 14, 2023. 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 second íscal quarter ending July 31, 2023, and the

full íscal year ending January 31, 2024, and Smartsheet’s expectations regarding possible or assumed business


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strategies, potential growth and innovation opportunities, new products, and potential market opportunities.

Forward-looking statements generally relate to future events or our future ínancial or operating performance.

Forward-looking statements include all statements that are not historical facts and can be identiíed 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 diìerent 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

beneíts of, potential acquisitions; and our international expansion strategies. Further information on risks that

could cause actual results to diìer materially from forecasted results is included in our ílings with the SEC,

including our Quarterly Report on Form 10-Q for the quarter ended April 30, 2023 to be íled with the SEC. 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 diìer materially from those anticipated in the forward-looking

statements.

Use of Non-GAAP Financial Measures

To supplement our condensed consolidated ínancial statements, which are prepared and presented in accordance

with GAAP, we use certain non-GAAP ínancial measures, as described below, to understand and evaluate our core

operating performance. These non-GAAP ínancial measures, which may be diìerent than similarly titled measures

used by other companies, are presented to enhance investors’ overall understanding of our ínancial performance

and should not be considered a substitute for, or superior to, the ínancial 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 ínancial measures. A reconciliation of the non-GAAP ínancial measures to such

GAAP measures can be found in the accompanying ínancial statements included with this press release.

We believe that these non-GAAP ínancial measures provide useful information about our ínancial 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 ínancial and operational decision
making. We are presenting these non-GAAP ínancial metrics to assist investors in seeing our ínancial performance


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through the eyes of management, and because we believe that these measures provide an additional tool for

investors to use in comparing our core ínancial performance over multiple periods with other companies in our

industry.

We deíne non-GAAP operating income (loss) as GAAP operating loss excluding share-based compensation expense,

amortization of acquisition-related intangible assets, one-time costs associated with mergers and acquisitions,

lease restructuring costs, and litigation expenses and settlements related to matters that are outside the ordinary

course of our business. We deíne non-GAAP net income (loss) as GAAP net loss excluding non-recurring income tax

adjustments associated with mergers and acquisitions and the same exclusions that are used to derive non-GAAP

operating income (loss). We deíne basic non-GAAP net income (loss) per share as non-GAAP net income (loss)

divided by weighted-average shares outstanding ("WASO"). We deíne diluted non-GAAP net income per share as

non-GAAP net income divided by diluted WASO. Diluted WASO includes the impact of potentially dilutive securities,

which include stock options, restricted share units, performance share units, and shares subject to our 2018

employee stock purchase plan. If there is a non-GAAP net loss, basic and diluted loss per share are the same

number as all potentially dilutive securities would have an antidilutive impact. 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 signiícant recurring expense in our business and an important part of our compensation

strategy.

We use the non-GAAP ínancial measure of free cash îow, which is deíned as GAAP net cash îows from operating

activities, reduced by cash used for purchases of property and equipment (inclusive of spend on internal-use

software). We believe free cash îow 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. Free cash îow 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 free cash îow as compared to net cash from

operating activities, including that free cash îow includes capital expenditures, the beneíts of which are realized in

periods subsequent to those when expenditures are made.

We deíne calculated billings as total revenue plus the change in deferred revenue in the period. Because we

recognize subscription revenue ratably over the subscription term, calculated billings can be used to measure our

subscription sales activity for a particular period, to compare subscription sales activity across particular periods,

and as an indicator of future subscription revenue.

Deínitions of Business Metrics


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Average ACV per domain-based customer

We deíne 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. We deíne

domain-based customers as organizations with a unique email domain name.

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. Any ACV obtained through merger and acquisition transactions does not aìect the

dollar-based net retention rate until one year from the date on which the transaction closed.

About Smartsheet

Smartsheet (NYSE: SMAR) is the enterprise platform for modern work management. By aligning people and

technology so organizations can move faster and drive innovation, Smartsheet enables its millions of users to

[achieve more. Visit www.smartsheet.com to learn more.](https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.smartsheet.com&esheet=53416473&newsitemid=20230607005712&lan=en-US&anchor=www.smartsheet.com&index=3&md5=f7cbd252bb30e8174b8cf12dd3e13686)

Disclosure of Material Information

Smartsheet announces material information to its investors using SEC ílings, press releases, public conference

[calls, and on its investor relations page of the company’s website at https://investors.smartsheet.com.](https://cts.businesswire.com/ct/CT?id=smartlink&url=https%3A%2F%2Finvestors.smartsheet.com&esheet=53416473&newsitemid=20230607005712&lan=en-US&anchor=https%3A%2F%2Finvestors.smartsheet.com&index=4&md5=7919d963d92b10f7879f11fb19d7d454)

SMARTSHEET INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

Three Months Ended April 30,

2023 2022

Revenue

Subscription $ 206,001 $ 155,276

Professional services 13,885 13,034

Total revenue 219,886 168,310

Cost of revenue

Subscription 33,167 25,138

Professional services 12,714 12,020

Total cost of revenue 45,881 37,158

G í 174 005 131 152


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Gross proít 174,005 131,152

Operating expenses

Research and development 56,190 52,519

Sales and marketing 114,952 115,391

General and administrative 34,978 33,044

Total operating expenses 206,120 200,954

Loss from operations (32,115) (69,802)

Interest income 5,217 388

Other income (expense), net (536) (828)

Loss before income tax provision (27,434) (70,242)

Income tax provision 2,436 215

Net loss $ (29,870) $ (70,457)

Net loss per share, basic and diluted $ (0.23) $ (0.55)

Weighted-average shares outstanding used to compute net loss per share, basic and diluted 132,542 128,519

Share-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands, unaudited):

Three Months Ended April 30,

2023 2022

Cost of subscription revenue $ 3,459 $ 2,611

Cost of professional services revenue 1,910 1,477

Research and development 17,432 15,615

Sales and marketing 19,054 14,745

General and administrative 9,924 9,452

Total share-based compensation expense $ 51,779 $ 43,900

SMARTSHEET INC.

Condensed Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)


April 30, 2023 January 31, 2023

Assets

Current assets

Cash and cash equivalents $ 294,946 $ 223,156

Short-term investments 194,593 233,225

Accounts receivable, net of allowances of $5,586 and $6,285, respectively 152,104 198,643

Prepaid expenses and other current assets 68,025 55,063

Total current assets 709,668 710,087

Restricted cash 189 197

Deferred commissions 129,058 121,785

Property and equipment, net 39,162 39,395

Operating lease right-of-use assets 51,123 54,278

Intangible assets, net 36,097 39,069

Goodwill 141,518 142,415

Other long-term assets 3,135 2,983

Total assets $ 1,109,950 $ 1,110,209

Liabilities and shareholders’ equity

Current liabilities

Accounts payable $ 1,727 $ 2,125

Accrued compensation and related beneíts 53,106 68,347

Other accrued liabilities 28,783 27,437

Operating lease liabilities, current 19,299 19,220

Deferred revenue 453,831 457,534

Total current liabilities 556,746 574,663

Operating lease liabilities, non-current 43,372 47,564

Deferred revenue, non-current 1,530 2,195

Other long-term liabilities 337 129

Total liabilities 601,985 624,551

Shareholders’ equity

Preferred stock, no par value; 10,000,000 shares authorized, no shares issued or outstanding as of
April 30, 2023 and January 31, 2023 — —

Class A common stock, no par value; 500,000,000 shares authorized, 132,912,458 shares issued
and outstanding as of April 30, 2023; 500,000,000 shares authorized, 131,845,028 shares issued
and outstanding as of January 31, 2023 — —

Class B common stock, no par value; 500,000,000 shares authorized, no shares issued and

t t di f A il 30 2023 500 000 000 h th i d h i d d t t di


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outstanding as of April 30, 2023; 500,000,000 shares authorized, no shares issued and outstanding
as of January 31, 2023 — —

Additional paid-in capital 1,296,364 1,243,730

Accumulated other comprehensive income (loss) (356) 101

Accumulated deícit (788,043) (758,173)

Total shareholders’ equity 507,965 485,658

Total liabilities and shareholders’ equity $ 1,109,950 $ 1,110,209

SMARTSHEET INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended April 30,

2023 2022

Cash îows from operating activities

Net loss $ (29,870) $ (70,457)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Share-based compensation expense 51,779 43,900

Depreciation and amortization 6,410 6,078

Net amortization of premiums (discounts) on investments (2,028) (49)

Amortization of deferred commission costs 11,429 13,077

Unrealized foreign currency loss 381 589

Non-cash operating lease costs 3,155 3,899

Other, net 872 —

Changes in operating assets and liabilities:

Accounts receivable 45,746 31,489

Prepaid expenses and other current assets (6,981) (13,103)

Other long-term assets (267) 32

Accounts payable (246) 5,688

Other accrued liabilities 1,581 5,595

Accrued compensation and related beneíts (20,552) (23,790)

Deferred commissions (18,701) (15,895)

Deferred revenue (4,452) 11,761

Other long-term liabilities 210 —

Operating lease liabilities (3,895) (3,867)

Net cash provided by (used in) operating activities 34,571 (5,053)

Cash îows from investing activities

Purchases of short-term investments (62,010) (207,274)

Maturities of short-term investments 96,885 —

Proceeds from liquidation of a long-term investment — 622

Purchases of property and equipment (853) (1,691)

Proceeds from sale of property and equipment 16 94

Capitalized internal-use software development costs (2,397) (2,323)

Net cash provided by (used in) investing activities 31,641 (210,572)

Cash îows from ínancing activities

Proceeds from exercise of stock options 532 1,370

Taxes paid related to net share settlement of restricted stock units (621) (1,366)

Proceeds from contributions to Employee Stock Purchase Plan 5,783 6,804

Net cash provided by ínancing activities 5,694 6,808

Eìects of changes in foreign currency exchange rates on cash, cash equivalents, and restricted cash (108) (821)

Net increase (decrease) in cash, cash equivalents, and restricted cash 71,798 (209,638)

Cash, cash equivalents, and restricted cash at beginning of period 223,757 449,680

Cash, cash equivalents, and restricted cash at end of period $ 295,555 $ 240,042

Supplemental disclosures
Cash paid for income tax $ 69 $ 68

Accrued purchases of property and equipment, including internal-use software 503 789

Share-based compensation expense capitalized in internal-use software development costs 803 748

Right-of-use assets obtained in exchange for new operating lease liabilities — 4,464

SMARTSHEET INC.

Reconciliation from GAAP to Non-GAAP Financial Measures

(unaudited)

Reconciliation from GAAP to non-GAAP operating income (loss) and operating margin


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Three Months Ended April 30,

2023 2022

(dollars in thousands)

Loss from operations $ (32,115) $ (69,802)

Add:

Share-based compensation expense(1) 52,200 44,228

Amortization of acquisition-related intangible assets(2) 2,709 2,483

Lease restructuring costs(3) 6 —

Non-GAAP operating income (loss) $ 22,800 $ (23,091)

Operating margin (15)% (41)%

Non-GAAP operating margin 10% (14)%

(1)Includes amortization related to share-based compensation that was capitalized in internal-use software and other assets in previous periods.
(2)Consists entirely of amortization of intangible assets that were recorded as part of purchase accounting. The amortization of intangible assets

related to acquisitions will recur in future periods until such intangible assets have been fully amortized.

(3)Includes charges related to the reassessment of our real estate lease portfolio.

Reconciliation from GAAP to non-GAAP net income (loss)

Three Months Ended April 30,

2023 2022

(in thousands)

Net loss $ (29,870) $ (70,457)

Add:

Share-based compensation expense(1) 52,200 44,228

Amortization of acquisition-related intangible assets(2) 2,709 2,483

Lease restructuring costs(3) 6 —

Non-GAAP net income (loss) $ 25,045 $ (23,746)

Non-GAAP net income (loss) per share, basic $ 0.19 $ (0.18)

Non-GAAP net income (loss) per share, diluted $ 0.18 $ (0.18)

(1)Includes amortization related to share-based compensation that was capitalized in internal-use software and other assets in previous periods.
(2)Consists entirely of amortization of intangible assets that were recorded as part of purchase accounting. The amortization of intangible assets

related to acquisitions will recur in future periods until such intangible assets have been fully amortized.

(3)Includes charges related to the reassessment of our real estate lease portfolio.

Non-GAAP reconciliation from basic to diluted weighted-average shares outstanding

Three Months Ended April 30,

2023 2022

(in thousands)

Weighted-average shares outstanding; basic 132,542 128,519

Eìect of dilutive securities:

Shares subject to outstanding common stock awards 4,186 —

Non-GAAP weighted-average shares outstanding; diluted 136,728 128,519


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SMARTSHEET INC.

Reconciliation from GAAP to Non-GAAP Financial Measures

(unaudited)

Reconciliation from net operating cash îow to free cash îow

Three Months Ended April 30,

2023 2022

(in thousands)

Net cash provided by (used in) operating activities $ 34,571 $ (5,053)

Less:

Purchases of property and equipment (853) (1,691)

Capitalized internal-use software development costs (2,397) (2,323)

Free cash îow $ 31,321 $ (9,067)

Reconciliation from revenue to calculated billings

Three Months Ended April 30,

2023 2022

(in thousands)

Total revenue $ 219,886 $ 168,310

Add:

Deferred revenue (end of period) 455,362 346,423

Less:

Deferred revenue (beginning of period) 459,729 334,662

Calculated billings $ 215,519 $ 180,071

SMARTSHEET INC.

Reconciliation from GAAP to Non-GAAP Financial Measures

(unaudited)

Reconciliation from GAAP operating loss to non-GAAP operating income guidance

Q2 FY 2024 FY 2024

Low High Low High

(in millions)

Loss from operations $ (52.7) $ (50.7) $ (187.4) $ (177.4)

Add:

Share-based compensation expense(1) 56.0 56.0 218.0 218.0

Amortization of acquisition-related intangible assets(2) 2.7 2.7 10.9 10.9

Lease restructuring costs(3) 1.0 1.0 1.5 1.5

Non-GAAP operating income $ 7.0 $ 9.0 $ 43.0 $ 53.0

(1)Includes amortization related to share-based compensation that was capitalized in internal-use software and other assets in previous periods.
(2)Consists entirely of amortization of intangible assets that were recorded as part of purchase accounting. The amortization of intangible assets

related to acquisitions will recur in future periods until such intangible assets have been fully amortized.

(3)Includes charges related to the reassessment of our real estate lease portfolio.

10


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Reconciliation from GAAP net loss to non-GAAP net income guidance

Q2 FY 2024 FY 2024

Low High Low High

(in millions)

Net loss $ (50.7) $ (48.7) $ (178.4) $ (168.4)

Add:

Share-based compensation expense(1) 56.0 56.0 218.0 218.0

Amortization of acquisition-related intangible assets(2) 2.7 2.7 10.9 10.9

Lease restructuring costs(3) 1.0 1.0 1.5 1.5

Non-GAAP net income $ 9.0 $ 11.0 $ 52.0 $ 62.0

(1)Includes amortization related to share-based compensation that was capitalized in internal-use software and other assets in previous periods.
(2)Consists entirely of amortization of intangible assets that were recorded as part of purchase accounting. The amortization of intangible assets

related to acquisitions will recur in future periods until such intangible assets have been fully amortized.

(3)Includes charges related to the reassessment of our real estate lease portfolio.

Smartsheet Inc.
Investor Relations Contact

Aaron Turner

[investorrelations@smartsheet.com](mailto:investorrelations@smartsheet.com)

Media Contact

Chrissy Vaughn

[pr@smartsheet.com](mailto:pr@smartsheet.com)

Source: Smartsheet

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