Smartsheet Inc. Q2 FY 2025 Financial Report

Smartsheet Inc. (NYSE: SMAR), a leading cloud-based platform for work execution, has reported solid financial results for the second quarter of fiscal year 2025, including a 17% year-over-year (YoY) growth in revenue, reaching $276.4 million. The company’s annualized recurring revenue (ARR) grew by 17% YoY to $1.093 billion, with significant expansion among enterprise customers.

Smartsheet introduced a new pricing and packaging model that has attracted thousands of new customers and announced key partnerships and platform modernization efforts. Despite a slight increase in churn among smaller customers, the company expects a transformative year ahead with significant growth in profitability, cash flow, and customer satisfaction.

Key Takeaways

• Smartsheet’s Q2 revenue grew 17% YoY to $276.4 million, with subscription revenue up 19% YoY.
• The company reported a 17% increase in ARR, reaching $1.093 billion.
• Smartsheet’s new pricing model resulted in thousands of new transactions and high engagement.
• There are 77 customers with ARR over $1 million, marking a 50% increase from the previous year.
• Fiscal Year 2025 guidance predicts revenue of $1.116 billion to $1.121 billion and free cash flow raised to $240 million.

Company Outlook

• Smartsheet maintains its revenue guidance for FY 2025, predicting a 16% to 17% increase.
• Expectations for services revenue have been lowered to 4.5% of total revenue.
• Updated Q3 revenue guidance estimates are between $282 million to $285 million, with non-GAAP operating income of $42 million to $44 million.
• For FY 2025, non-GAAP net income per share is projected to be $1.36 to $1.39.
• Migration to the new pricing model for existing customers is planned to begin in January.

Bearish Highlights

• A slight uptick in churn was observed among smaller customers.
• The service revenue estimate has been lowered due to increased service support from partners.

Bullish Highlights

• The new pricing model has been received positively, enhancing customer transactions.
• Expansions with global system integrators are progressing.
• The annual ENGAGE conference in October will showcase new features.

Misses

• No details were provided on the number of paid users under the new pricing model.

Q&A Highlights

• Mark Mader emphasized the importance of effectively presenting software offerings to drive transactions.
• The company is focused on operational efficiency while investing in growth areas.
• Smartsheet anticipates improvements in profitability and cash flow in the next year.

Smartsheet’s earnings call highlighted its strong position in the enterprise sector and a positive market response to its strategic initiatives. The company’s commitment to innovation and customer satisfaction, along with updated financial guidance, underscores confidence in its growth trajectory for the remainder of FY 2025.

InvestingPro Insights

Smartsheet Inc. (SMAR) has demonstrated robust financial growth with a notable 17% year-over-year increase in revenue for Q2 FY 2025. Strategic moves, including a new pricing model and platform enhancements, have been pivotal in attracting new enterprise customers and expanding its annualized recurring revenue (ARR).

With a market capitalization of $6.83 billion, Smartsheet is a significant player in cloud-based work execution platforms. Despite not being profitable over the last twelve months, the gross profit margin stands impressively at 81.61%, indicating operational efficiency in generating revenue from its services. The company’s revenue growth has been consistent, with 20.16% increase over the last twelve months as of Q2 2025.

InvestingPro Tips highlight key factors for investors regarding Smartsheet’s prospects. The company holds more cash than debt, indicating financial stability. Analysts predict profitability this year, aligning with Smartsheet’s expectations for transformative growth. The low price volatility of the stock may appeal to stable investment seekers.

For more insights, readers can access 8 more InvestingPro Tips available for Smartsheet at InvestingPro.