Q1 2025 Smartsheet Inc Earnings Call Transcript
Key Points
- Smartsheet Inc (SMAR) reported a strong Q1 with annualized recurring revenue (ARR) reaching $1.056 billion, reflecting a 19% year-over-year growth.
- The company saw significant customer expansion, with 53 customers increasing their ARR by more than $100,000 and 72 customers now having ARR over $1 million, up 50% from the previous year.
- Smartsheet Inc (SMAR) introduced a new pricing and packaging model expected to be modestly accretive in the near term and meaningfully accretive in the longer term, providing broader access to features at a lower price per user.
- The company continues to see meaningful adoption of its AI tools, with nearly half of enterprise customer plans using Smartsheet AI since its launch in February.
- Smartsheet Inc (SMAR) reported a total gross margin of 84% and a subscription gross margin of 88%, showcasing strong operational efficiency.
- The company experienced elevated churn rates in its smaller customer segments, which slightly increased the overall churn rate.
- Despite the strong performance, the SMB segment showed consistent trends with no significant improvement, indicating potential challenges in this market segment.
- The new pricing and packaging model, while promising, may introduce some near-term disruption as existing customers transition to the new model in 2025.
- The company’s dollar-based net retention rate, inclusive of all customers, was 114%, indicating room for improvement in customer retention and expansion.
- The macroeconomic environment remains challenging, and the company has adopted a cautious approach in its revenue guidance, reflecting potential uncertainties in the market.
Ladies and gentlemen, good afternoon and thank you for standing by. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the Smartsheet first-quarter fiscal 2025 earnings conference call. (Operator Instructions)
Thank you. And I would now like to turn the conference over to Aaron Turner, Head of Investor Relations. You may begin.
Great. Thank you, Abby. Good afternoon, and welcome, everyone, to Smartsheet's first 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's CEO Mark Madar; and our CFO, Pete Godbole. Today's call is being webcast and will also be available for replay on our Investor Relations website at investors.smartsheet.com. There is a slide presentation that accompanies Pete's prepared remarks, which can be viewed in the Events section of our Investor Relations website.
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