Smartsheet Inc.

Good afternoon and welcome to the Smartsheet Inc. second quarter fiscal 2025 earnings conference call. Please note that this call is being recorded. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, press star one a second time. I will now turn the call over to Mr. Aaron Turner, head of investor relations. You may begin your conference.

Great, thank you. Good afternoon and welcome everyone to Smartsheet's second quarter of fiscal year 2025 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 Godbold. 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 preferred 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 or adversely. All forward-looking statements made during this call are based on information available to us as of today, and 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 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 second quarter earnings call for fiscal year 2025. Q2 was a strong quarter that further demonstrated our momentum in the enterprise. Seventy-five customers expanded their Smartsheet ARR by more than $100,000, and we had three transactions over $1 million, one of which was over $4 million. We now have 77 customers with ARR over $1 million, up 50% from Q2 last year, and of those 77 customers, five of them are government agencies. We ended the quarter with annualized recurring revenue of $1.093 billion and more than 15.3 million Smartsheet users. In Q2, we expanded with customers including Intuit, Skechers, and Citi National Bank, among others. In June, we launched our new pricing and packaging model. To date, we've seen thousands of new customers transact on the model, which is leading to high engagement and the addition of many provisional members across these plans. While only a small number of our customers have reached their first true-up period, we are encouraged by the positive early results. Building on the success with global system integrators mentioned on our last call in Q2, we signed a large expansion with another big four consulting firm where Smartsheet is being used to streamline client engagement. Smartsheet enabled them to automate their processes through a standardized project delivery framework, which improved the quality of their work and led to significant savings. This customer was an early adopter of our new pricing model, and they estimate that deploying Smartsheet at scale saved the team 39,000 working hours in the last year, reducing their project delivery costs by nearly 12%. Demand for Smartsheet is growing across their organization, with users at the company increasing by 120% year over year. They are now expanding their Smartsheet project delivery solution to support customers in the EU and U.S. federal government. They are also building new solutions to streamline other aspects of their client engagement lifecycle. We also had a seven-figure expansion with one of our largest enterprise customers during their annual renewal. With a total SmartJet user population of over 150,000 users, our success in this account has been driven in part by our differentiated feature set and our enterprise-grade security and administration. Smartsheet has corporate level IT and security approval, enabling any team across the company to adopt Smartsheet. As a result of increased self-discovery, we have seen a boost in demand of our premium capabilities and growth in this account. This has resulted in data shuttle workflows increasing nearly 200% and dynamic view configurations growing by 450% over the past year. Also in Q2, we closed a competitive deal with a prominent financial services company following an RFP process that included other CWM vendors. This new customer onboards thousands of clients a year, and they're executing increasingly complex projects. In order to scale with their customers, they needed to replace their in-house solution with a more robust work management platform, and they chose Smartsheet because of our enterprise readiness and scale. We're partnering with them to develop an integrated project delivery solution, that will streamline their processes, improve collaboration with clients, and establish unified reporting. They expect this solution to increase customer satisfaction while saving their employees thousands of hours per year, unlocking the capacity to work on additional projects and ultimately grow revenue. As we move into the second half of FY25, we are making good progress on the comprehensive modernization of the Smartsheet platform, a strategic investment that is ongoing. In just a few weeks, we'll be hosting our annual customer conference, Engage Seattle. During this year's conference, we'll be showcasing the new Smartsheet, a new experience that is more beautiful, powerful, and more integrated than ever before. It will empower our customers to manage their projects, programs, and processes at even larger scale and sophistication. The new Smartsheet experience simplifies and streamlines getting started for users. It will be easier to create solutions and quickly initiate projects and processes with all the necessary tools for configuration and management, all accessible right from a highly visual AI-driven home experience. We are also introducing significant enhancements in how users create, organize, and share, whether they're building assets for a marketing campaign or managing documentation for a service delivery program. One of the key improvements simplifies collaboration with stakeholders. making it easier to collect feedback and drive reviews on digital files such as images, videos, and PDFs. Over the past few months, I've personally seen the benefits of more accurate, actionable feedback and the substantial time savings for our teams. I believe our customers are going to love this new collaboration experience. The new and improved Smartsheet features, along with our new user subscription model and self-service access to premium capabilities, enables more customers to solve their most common, as well as their more complex work management needs. Generative AI is proving to be a helpful differentiator for Smartsheet. Our AI-powered tools like formula generation and text summaries are designed to simplify complex tasks, saving time and reducing errors. We're committed to expanding these capabilities to help our customers work more efficiently. In Q2, we saw nearly 50% sequential growth in the number of users utilizing our AI tools. Adoption is already showing significant benefits to our customers, with approximately 47,000 users having already saved an estimated 1 million hours from AI automations and performance improvements. We also saw positive early results, suggesting that AI-generated formulas and conversational support are effectively acting as a first point of contact for customer support, reducing friction with the platform and lowering our customer support costs. We expect to see the customer impact of AI tools grow meaningfully as we expand them to support cross-sheet formulas, provide portfolio insights, and co-build solutions with users. Starting mid-September, in a push to enable customers to feel the impact of AI and to experience one benefit of our enterprise plan, Smartsheet will grant limited-time access to our AI tools to all users through December 31, 2024. In closing, nearly two quarters since the hiring of Max Long and the appointment of Prayer Guard to their respective roles, investments in our go-to-market and deployment of our next-gen product experiences are well underway. Through a combination of a use case-oriented value framework, a simplified licensing model, new user experiences, and class-leading scale, FY25 will be a transformative year for our customers, our company, and the Smartsheet platform. We are laying the foundation for the years ahead. Now let me turn the call over to Pete.