Smartsheet Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Smartsheet fourth quarter fiscal 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. Aaron Turner, head of investor relations, you may begin your conference.

Thank you, Josh. Good afternoon and welcome everyone to Smartsheet's fourth quarter of fiscal year 2022 earnings call. We will be discussing the results announced in our press release issued after the market closed today. With me today are Smartsheet CEO Mark Mader and our CFO Pete Godwell. Today's call is being webcast and will also be available for replay on our investor relations website at investors.smartsheet.com. There's a slide presentation that accompanies Pete's prepared remarks, which can be viewed in the events section of our investor relations website. During this call, we will make forward-looking statements within the meaning of the federal securities laws. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends. These forward-looking statements are subject to a number of risks and other factors, including but not limited to those described in our SEC filings available on our investor relations website, and on the SEC website at www.sec.gov. Although we believe that the expectations reflected in the forward-looking statements are reasonable, our actual results may differ materially and adversely. All forward-looking statements made during this call are based on information available to us as of today. We do not assume any obligation to update these statements as a result of new information or future events, except as required by law. In addition to the U.S. GAAP financials, we will discuss certain non-GAAP financial measures. A reconciliation to the most directly comparable U.S. GAAP measures is available in the presentation that accompanies this call, which can also be found on our investor relations website. With that, let me turn the call over to Mark.

Thank you, Aaron, and good afternoon, everyone. Welcome to our fourth quarter earnings call for FY22. Before speaking to our results, I'd like to start by sharing that our thoughts and support are with the people of Ukraine and all those affected. Today we'll be sharing the results of an outstanding quarter that rolls up to an extraordinary year at Smartsheet. We'll also discuss our proven strategy that reinforces my confidence in our growth trajectory and will keep us positioned at the top of the CWM category. While Pete will provide details, I want to share some standout results, first for the quarter and then for the year. Smartsheet revenue for Q4 grew 43% year-over-year to $157.4 million, and billings grew 48% year-over-year to $224 million. We closed out the year with more than 10 million Smartsheet users. Q4 saw both a new quarterly record of 286 deals of more than $50,000 and a new quarterly record of 98 deals of more than $100,000, up 107% and 128% respectively year-over-year. Given the acceleration of billings in FY22, the momentum in the business is very strong, and I'm confident with the setup as we start FY23. According to Okta's 2022 Business at Work study, Smartsheet is now the most popular work management platform that businesses use alongside Microsoft 365. In fact, Smartsheet is the only work management platform to appear on Okta's list of the eight most popular apps used in conjunction with M365. We've also been included as a top performer on the 2022 Capterra shortlist of the highest scoring project management software products based on feedback from thousands of users. Additionally, we've earned the most five-star customer reviews in both the CWM and PPM categories of Gartner Peer Insights. By delivering a no-code enterprise solution in which more people and more teams can move more quickly to take action and drive outcomes that matter, Smartsheet customers are realizing significant returns on their Smartsheet investments. Our unique land expand and climb motion drives a category-leading dollar-based net retention rate inclusive of all customers of over 134%. We continue to make significant progress on improving the land motion. Between the introduction of the pro plan, simplification of our onboarding processes, and the success of our new business team has had selling advance to new customers New business volume is at record levels. In fact, Q4 was a record quarter for new business bookings and a record quarter for the number of licenses purchased by new customers. As customers graduate from basic productivity use cases to transforming larger operational workflows, we see uptake and acceptance across more departments. We also continue to enable viral growth inside and outside of customer organizations. By allowing free use of the product by anyone who's invited to collaborate, we pull our customers' extended teams, partners, and suppliers into that Smartsheet environment, letting them experience the benefits of Smartsheet firsthand. Today, with a best-in-class net expansion rate, our expansion motion continues to fire on all cylinders. In Q4, we saw expansions from companies such as Target, Lucid Motors, Herman Miller, Zendesk, Beyond Meat, PACCAR, General Mills, Daimler, and Goodwill. But our growth is fueled by more than expanding our user base. We continue to see success with Smartsheet climbing up the value chain as customers attach to mission-critical workflows across systems and people within their organizations. In FY22, we saw a global media conglomerate triple its ARR to over $2 million. This significant growth was driven by both paid license additions, of which they added over 1,000 paid seats, and Advanced Gold. This organization added $300,000 in ARR in Q4 alone. A global wireless communication provider doubled their ARR in FY22 through 14 separate transactions of $50,000 or more. These represented sales to new departments as well as expansion across existing departments, up-leveling their Smartsheet usage by attaching capabilities that allowed groups to scale and integrate Smartsheet workflows. This land expand and climb scenario repeats itself again and again, increasing the active user base within the Smartsheet ecosystem, which in turn leads to growth of our user license space and deployment in high value workloads. Now I'd like to underscore some of the product developments that are fueling our growth. In Q2 of FY22, we introduced Smartsheet Advanced and created a new tiered way for customers to unlock the full potential of Smartsheet to scale. Advanced Silver enables businesses to orchestrate sophisticated programs, projects, and processes using tools like Control Center. Customers can also create curated no-code applications to drive workflows across internal and external collaborators using Work Apps and Dynamic View. In Q4, the total number of created Work Apps grew 28% quarter over quarter to over 69,000. With Advanced Gold, Customers get a comprehensive set of data integration capabilities that enable the import and export of millions of records to and from other systems using Data Shuttle and Data Table. They can also trigger data processing workflows based on events using Bridge, as well as continuously synchronizing data between Smartsheet and other systems using our real-time connectors. Data Shuttle is now transferring over 3 billion records every month, up from 1.7 billion in Q2. At the top tier, Advanced Platinum adds key capabilities for organizations that desire additional levels of compliance, governance, and advanced policy measurement. The advisory practice at BDO, one of the world's largest accounting networks, purchased Advanced Gold in Q4. Advanced will support many aspects of their business, including practice forecasting and planning, portfolio performance tracking, and standardizing cross-functional projects across practice areas. When we introduced ADVANCE, our expectations were that new customers would use Smartsheet for a period of time for simpler use cases before moving up to Smartsheet ADVANCE. Instead, we're starting to see a meaningful number of new customers choosing ADVANCE from the start. Just in Q4, over 20% of the ADVANCE deals we closed were to new customers of Smartsheet. ADVANCE features resonates with customers at organizations of all sizes, from million-dollar-plus ARR customers in the Fortune 500 to organizations like the Olympia School District in Washington State. The Olympia School District is using Advanced to scale as they add more projects to develop a process for grant management. They're looking to pave the way for other school districts to embrace technology solutions that can help them better serve their communities. Our innovation velocity continues to produce as well. Some highlights include work insights, allowing users to automatically analyze and visualize sheet data as a snapshot time series or crosstab, enterprise plan manager, ensuring all of an organization's Smartsheet plans follow security, governance, and compliance requirements, unified resource management, making it seamless to build the best team for the job all from within one core Smartsheet experience. And just last week, we announced deep integration of Brandfolder's top-rated digital asset management capabilities into the Smartsheet platform after working with a diverse set of beta customers. Enhancing the functionality between Smartsheet and brand folder helps customers better align their marketing and creative work by streamlining asset management. For example, a content development manager at IS Clinical can now manage the development of visual assets for the company's website in one unified solution. When creatives bring assets into brand folder, the integration is used to surface those assets in Smartsheet, manage approvals, and reflect the completion of deliverables. Customers can now see brand folder insights like asset views, downloads, and shares within Smartsheet, helping marketers make more informed, creative decisions. Since acquiring brand folder, we've extended the value of Smartsheet across a broad set of use cases with customers like Ethan Allen, Wynn Resorts, and U-Haul. On the security front, the threat landscape is rapidly evolving and intensifying. More and more CIOs and CISOs are deeply inspecting critical data governance and controls. Capabilities such as customer-controlled encryption keys, integrations with corporate directories and data loss prevention and classification systems, granular sharing, and egress controls are differentiating Smartsheet as the most enterprise-ready CWM platform in the market. An example of the security-first focus we're seeing comes from a top five investment firm. Earning the trust of the VP of Information Security was a key step in getting IT to adopt and promote Smartsheet across the organization. With securities buy-in, Smartsheet was deployed across a number of use cases, including investment management, capital analysis, and corporate strategy, representing a six-figure expansion in Q3. This was quickly followed by an additional expansion in Q4 to support several additional workstreams. We are in the middle of a massive greenfield opportunity with over a billion knowledge workers globally, where only a very small fraction of them have discovered the power of Smartsheet. And while most of our deals involve replacing the status quo of highly manual processes and primitive tools like spreadsheets, emails, and presentations, we are also displacing competitive CWM products as well. One such win was with a global production company that delivers thousands of events worldwide. The company initially engaged with Smartsheet while using a competitive CWM product, but their existing solution lacked the adaptability, scale, and integrations required to manage the full scope of their work. We were able to demonstrate Smartsheet's ability to meet their needs at scale. This includes delivering time savings and smoother customer handoffs from their sales organization using our Microsoft Dynamics Connector, making informed resourcing decisions with Smartsheet Resource Management, supplying their creative teams with best-in-class creative collaboration capabilities via brand folder, delivering a better customer experience with dashboards and a mobile app that connects employees in the field. Over the past few years, we've invested in high-potential markets like Europe, Asia-Pac, and the US federal government. In October of last year, we launched Smartsheet Regions, offering in the EU, enabling customers to establish plans with their content hosted in Germany. Already, we're unlocking opportunities and quickly gaining momentum with EU customers. One of them, a European biotech company, is using Smartsheet to manage the release of its cancer treatment therapeutics. The company started with our US-based region, but was unable to fully deploy Smartsheet on the Smartsheet platform due to EU data privacy requirements. But with our EU region, this company was able to invest in both Smartsheet Enterprise and Advanced Silver, leveraging control center and dynamic view to help scale out therapeutic development workflows. Building on our international investments, we established a sales office in Germany and will be expanding into Japan this fiscal year. To close, we're positioned in the right place at the right time as the market for modern work management grows rapidly. We're hiring exceptional people and giving them the tools, resources, and latitude they need to do great things. In a tight job market, We expanded our team by more than 600 people in FY22. I have never felt more certain about our success going forward. Customers are choosing Smartsheet in record numbers, and the investments we're making across sales, marketing, and product will directly support our growth for the years to come. Now I'll turn it over to Pete.