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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                 
Commission File No. 001-38464
Smartsheet Inc.
(Exact name of Registrant as specified in its charter)
Washington20-2954357
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
10500 NE 8th Street, Suite 1300
Bellevue,WA98004
(Address of principal executive offices)(Zip Code)
(844)324-2360
Registrant’s telephone number, including area code
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, no par value per shareSMARThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No 
As of May 31, 2022, there were 129,450,048 shares of the registrant’s Class A common stock outstanding.



SMARTSHEET INC.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended April 30, 2022
Table of ContentsPage



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “likely,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends, including, but not limited to, the macroeconomic impact of COVID-19, which we believe has affected and may continue to affect our financial condition, operating results, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described under Part II, Item 1A, “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely on forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or may not occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or will occur. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations.


Part I. Financial Information
Item 1. Financial Statements
SMARTSHEET INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)



Three Months Ended April 30,
20222021
Revenue
Subscription$155,276 $108,013 
Professional services13,034 9,069 
Total revenue168,310 117,082 
Cost of revenue
Subscription25,138 18,563 
Professional services12,020 8,009 
Total cost of revenue37,158 26,572 
Gross profit131,152 90,510 
Operating expenses
Research and development52,519 36,474 
Sales and marketing115,391 71,379 
General and administrative33,044 21,018 
Total operating expenses200,954 128,871 
Loss from operations(69,802)(38,361)
Interest income388 11 
Other income (expense), net(828)1,327 
Loss before income tax provision(70,242)(37,023)
Income tax provision215 49 
Net loss$(70,457)$(37,072)
Net loss per share, basic and diluted$(0.55)$(0.30)
Weighted-average shares outstanding used to compute net loss per share, basic and diluted128,519 124,110 
See notes to condensed consolidated financial statements.
4

SMARTSHEET INC.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
Three Months Ended April 30,
20222021
Net loss$(70,457)$(37,072)
Other comprehensive loss
Net unrealized losses on available-for-sale securities(342) 
Comprehensive loss$(70,799)$(37,072)
See notes to condensed consolidated financial statements.
5

SMARTSHEET INC.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)
April 30, 2022January 31, 2022
Assets
Current assets
Cash and cash equivalents$239,683 $449,074 
Short-term investments206,981  
Accounts receivable, net of allowances of $5,534 and $7,561, respectively
119,473 151,138 
Prepaid expenses and other current assets46,008 34,390 
Total current assets612,145 634,602 
Restricted cash16 17 
Deferred commissions94,130 91,312 
Property and equipment, net37,787 36,835 
Operating lease right-of-use assets67,735 67,171 
Intangible assets, net41,610 44,096 
Goodwill125,605 125,605 
Other long-term assets2,930 3,194 
Total assets$981,958 $1,002,832 
Liabilities and shareholders’ equity
Current liabilities
Accounts payable$7,366 $1,506 
Accrued compensation and related benefits46,337 66,744 
Other accrued liabilities24,378 18,901 
Operating lease liabilities, current19,330 18,003 
Deferred revenue344,657 332,285 
Total current liabilities442,068 437,439 
Operating lease liabilities, non-current57,148 58,237 
Deferred revenue, non-current1,766 2,377 
Total liabilities500,982 498,053 
Commitments and Contingencies (Note 12)
Shareholders’ equity
Preferred stock, no par value; 10,000,000 shares authorized, no shares issued or outstanding as of April 30, 2022 and January 31, 2022
  
Class A common stock, no par value; 500,000,000 shares authorized, 128,867,149 shares issued and outstanding as of April 30, 2022; 500,000,000 shares authorized, 127,809,525 shares issued and outstanding as of January 31, 2022
  
Class B common stock, no par value; 500,000,000 shares authorized, no shares issued and outstanding as of April 30, 2022; 500,000,000 shares authorized, no shares issued and outstanding as of January 31, 2022
  
Additional paid-in capital1,094,309 1,047,313 
Accumulated other comprehensive loss(342) 
Accumulated deficit(612,991)(542,534)
Total shareholders’ equity480,976 504,779 
Total liabilities and shareholders’ equity$981,958 $1,002,832 
See notes to condensed consolidated financial statements.
6

SMARTSHEET INC.
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(dollars in thousands)
(unaudited)
Three Months Ended April 30, 2022
Common Stock (Class A)Additional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal Shareholders’ Equity
SharesAmount
Balances at January 31, 2022 127,809,525 $ $1,047,313 $(542,534)$ $504,779 
Issuance of common stock under employee stock plans1,057,624 — 3,714 — — 3,714 
Taxes paid related to net share settlement of equity awards— — (1,366)— — (1,366)
Share-based compensation expense— — 44,648 — — 44,648 
Comprehensive loss— — — — (342)(342)
Net loss— — — (70,457)— (70,457)
Balances as of April 30, 2022128,867,149 $ $1,094,309 $(612,991)$(342)$480,976 

Three Months Ended April 30, 2021
Common Stock (Class A)Additional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal Shareholders’ Equity
SharesAmount
Balances at January 31, 2021123,272,902 $ $898,366 $(371,437)$ $526,929 
Issuance of common stock under employee stock plans1,337,827 — 12,315 — — 12,315 
Taxes paid related to net share settlement of equity awards— — (2,763)— — (2,763)
Share-based compensation expense— — 24,101 — — 24,101 
Comprehensive loss— — — — —  
Net loss— — — (37,072)— (37,072)
Balances as of April 30, 2021124,610,729 $ $932,019 $(408,509)$ $523,510 
See notes to condensed consolidated financial statements.




7

SMARTSHEET INC.
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
Three Months Ended April 30,
20222021
Cash flows from operating activities
Net loss$(70,457)$(37,072)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense43,900 23,717 
Depreciation and amortization6,078 4,792 
Amortization of deferred commission costs13,077 9,201 
Net amortization of premium or discount on investments(49) 
Unrealized foreign currency (gain) loss589 (319)
Non-cash operating lease costs3,899 3,491 
Changes in operating assets and liabilities:
Accounts receivable31,489 13,357 
Prepaid expenses and other current assets(13,103)(3,634)
Other long-term assets32 199 
Accounts payable5,688 (1,072)
Other accrued liabilities5,595 (5,480)
Accrued compensation and related benefits(23,790)(7,465)
Deferred commissions(15,895)(15,341)
Deferred revenue11,761 15,670 
Operating lease liabilities(3,867)(3,005)
Net cash used in operating activities(5,053)(2,961)
Cash flows from investing activities
Purchases of short-term investments(207,274) 
Purchases of property and equipment(1,691)(3,220)
Proceeds from liquidation of an investment622  
Proceeds from sale of property and equipment94  
Capitalized internal-use software development costs(2,323)(2,017)
Net cash used in investing activities(210,572)(5,237)
Cash flows from financing activities
Proceeds from exercise of stock options1,370 3,403 
Taxes paid related to net share settlement of equity awards(1,366)(2,763)
Proceeds from Employee Stock Purchase Plan6,804 4,687 
Net cash provided by financing activities6,808 5,327 
Effects of changes in foreign currency exchange rates on cash, cash equivalents, and restricted cash(821)447 
Net decrease in cash, cash equivalents, and restricted cash(209,638)(2,424)
Cash, cash equivalents, and restricted cash at beginning of period449,680 442,348 
Cash, cash equivalents, and restricted cash at end of period$240,042 $439,924 

Supplemental disclosures
Cash paid for income taxes$68 $27 
Right-of-use assets obtained in exchange for operating lease liabilities4,464  
Accrued purchases of property and equipment (including internal-use software)789 1,505 
Share-based compensation expense capitalized in internal-use software development costs748 384 
See notes to condensed consolidated financial statements.
8

SMARTSHEET INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

1. Overview and Basis of Presentation
Description of business
Smartsheet Inc. (the “Company,” “we,” “our”) was incorporated in the State of Washington in 2005, and is headquartered in Bellevue, Washington. The Company is the enterprise platform for dynamic work, enabling teams and organizations of all sizes to plan, capture, manage, automate, and report on work at scale, resulting in more efficient processes and better business outcomes. Customers access their accounts online via a web-based interface or a mobile application. Some customers also purchase the Company’s professional services, which primarily consist of consulting and training services.
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated balance sheet as of January 31, 2022 was derived from the audited consolidated financial statements as of that date but does not include all of the information and notes required by GAAP for complete financial statements. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended January 31, 2022, filed with the SEC on March 25, 2022.
The condensed consolidated financial statements include the results of Smartsheet Inc. and its wholly owned subsidiaries, which are located in the United States, the United Kingdom, Australia, Germany, and Costa Rica. All intercompany balances and transactions have been eliminated upon consolidation.
In the opinion of management, the information contained herein reflects all adjustments necessary for a fair presentation of our condensed consolidated financial statements. All such adjustments are of a normal, recurring nature. The results of operations for the three months ended April 30, 2022 are not necessarily indicative of results to be expected for the full year ending January 31, 2023, or for any other interim period, or for any future year.
Use of estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. The Company bases its estimates on historical experience and on other assumptions that its management believes are reasonable under the circumstances. Actual results could differ from those estimates. The Company’s most significant estimates and judgments involve revenue recognition with respect to the allocation of transaction consideration for the Company’s offerings; determination of the amortization period for capitalized sales commission costs; and the measurement of fair values of share-based compensation award grants, among others.

2. Summary of Significant Accounting Policies
Segment information
The Company operates as one operating segment. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information for purposes of making operating decisions, assessing financial performance, and allocating resources.
9

SMARTSHEET INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. Interest earned on cash and cash equivalents is recorded in interest income in the condensed consolidated statements of operations.
Restricted cash
Restricted cash was $0.4 million and $0.6 million as of April 30, 2022 and January 31, 2022, respectively, primarily related to Australian employee contributions to our 2018 Employee Stock Purchase Plan.
Cash as reported on the condensed consolidated statements of cash flows includes the aggregate amounts of cash and cash equivalents and restricted cash as shown on the condensed consolidated balance sheets. Cash as reported on the condensed consolidated statements of cash flows consisted of the following (in thousands):
April 30,
20222021
Cash and cash equivalents$239,683 $439,656 
Restricted cash included in prepaid expenses and other current assets343 250 
Restricted cash16 18 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows$240,042 $439,924 
Short-term investments
The Company’s short-term investments primarily consist of U.S. Treasury securities, corporate bonds, and commercial paper that have original maturities greater than three months at the time of purchase. These investments are classified as available-for-sale securities and we reevaluate such classification as of each balance sheet date. We consider all investments as available for use in current operations, including those with maturity dates beyond one year, and therefore classify these securities as current assets in our condensed consolidated balance sheets.
Available-for-sale securities are recorded at fair value each reporting period. For unrealized losses in securities that the Company intends to hold and will not more likely than not be required to sell before recovery, the Company further evaluates whether declines in fair value below amortized cost are due to credit or non-credit related factors. The Company considers credit related impairments to be changes in value that are driven by a change in the creditor’s ability to meet its payment obligations, and records an allowance and recognizes a corresponding loss in other income (expense), net in the condensed consolidated statements of operations when the impairment is incurred. Unrealized non-credit related losses and unrealized gains are reported as a separate component of accumulated other comprehensive loss in the condensed consolidated balance sheets until realized. Realized gains and losses are determined based on the specific identification method and are reported in other income (expense), net in the condensed consolidated statements of operations.
Internal-use software development costs
The Company capitalizes certain qualifying costs incurred during the application development stage in connection with the development of internal-use software. Costs related to preliminary project activities and post-implementation activities are expensed in research and development (“R&D”) as incurred. R&D expenses consist primarily of employee-related costs, software-related costs, allocated overhead, and costs of outside services used to supplement our internal staff.
Internal-use software costs of $2.6 million and $1.8 million were capitalized in the three months ended April 30, 2022 and 2021, respectively. All capitalized costs related to costs incurred during the application development stage of software development for the Company’s platform to which subscriptions are sold.
10

SMARTSHEET INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Capitalized internal-use software costs are included within property and equipment, net on the condensed consolidated balance sheets, and are amortized over the estimated useful life of the software, which is typically three years. The related amortization expense is recognized in the condensed consolidated statements of operations within the function that receives the benefit of the developed software. Amortization expense of capitalized internal-use software costs totaled $1.9 million and $1.2 million for the three months ended April 30, 2022 and 2021, respectively.
Concentrations of risk and significant customers
Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash, cash equivalents, short-term investments, and accounts receivable. The Company maintains its cash accounts with financial institutions where deposits, at times, exceed the Federal Deposit Insurance Corporation (“FDIC”) limits.
No individual customer represented more than 10% of accounts receivable as of April 30, 2022 or January 31, 2022. No individual customer represented more than 10% of revenue for the three months ended April 30, 2022 or 2021.
Recent accounting pronouncements not yet adopted
In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update 2021-08, Business Combinations-Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805). The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with Accounting Standards Codification (“ASC”) Topic 606 as if the acquirer had originated the contracts. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect adoption of this standard to have a material effect on the Company’s condensed consolidated financial statements.

3. Revenue from Contracts with Customers
During the three months ended April 30, 2022 and 2021, the Company recognized $131.0 million and $87.0 million of subscription revenue, respectively, and $3.7 million and $3.6 million of professional services revenue, respectively, which were included in the deferred revenue balance as of January 31, 2022 and 2021, respectively.
As of April 30, 2022, approximately $401.0 million of revenue, including amounts already invoiced and amounts contracted but not yet invoiced, was expected to be recognized from remaining performance obligations, of which $394.5 million related to subscription services and $6.5 million related to professional services. Approximately 91% of revenue related to total remaining performance obligations is expected to be recognized in the next 12 months.

4. Deferred Commissions
Deferred commissions were $94.1 million as of April 30, 2022 and $91.3 million as of January 31, 2022.
Amortization expense for deferred commissions was $13.1 million and $9.2 million for the three months ended April 30, 2022 and 2021, respectively. Deferred commissions are amortized over a period of three years and the amortization expense is recorded in sales and marketing on the Company’s condensed consolidated statements of operations.
11

SMARTSHEET INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
5. Net Loss Per Share
The following table presents calculations for basic and diluted net loss per share (in thousands, except per share data):
Three Months Ended April 30,
20222021
Numerator:
Net loss
$(70,457)$(37,072)
Denominator:
Weighted-average common shares outstanding
128,519 124,110 
Net loss per share, basic and diluted
$(0.55)$(0.30)
The following outstanding shares of common stock equivalents (in thousands) as of the periods presented were excluded from the computation of diluted net loss per share attributable to common shareholders for the periods presented because the impact of including them would have been anti-dilutive:
April 30,
20222021
Shares subject to outstanding common stock awards11,569 12,050 
Shares issuable pursuant to the 2018 Employee Stock Purchase Plan216 54 
Total potentially dilutive shares11,785 12,104 
12

SMARTSHEET INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
6. Investments
All cash equivalents and short-term investments were designated as available-for-sale securities as of April 30, 2022. The following table presents the amortized costs, unrealized gains and losses, and estimated fair values of the Company’s cash equivalents and short-term investments as of April 30, 2022 (in thousands):
April 30, 2022
Amortized Cost*Unrealized GainsUnrealized LossesEstimated Fair Value
Cash equivalents:
Money market funds$161,162 $ $ $161,162 
Corporate bonds9,526   9,526 
Total cash equivalents170,688   170,688 
Short-term investments:
Corporate bonds67,092  (266)66,826 
U.S. Treasury securities97,474 2 (78)97,398 
Commercial paper42,757   42,757 
Total short-term investments207,323 2 (344)206,981 
Total$378,011 $2 $(344)$377,669 
*Excludes interest receivable of $0.5 million, which is included in prepaid expenses and other current assets on the condensed consolidated balance sheets.
We do not intend to sell, nor is it more likely than not that we will be required to sell, any investments in unrealized loss positions before recovery of their amortized cost basis. We did not recognize any credit losses related to our investments during the three months ended April 30, 2022. The unrealized losses on our short-term investments were primarily due to unfavorable changes in interest rates subsequent to initial purchase. None of the short-term investments held as of April 30, 2022 were in a continuous unrealized loss position for greater than 12 months. There were no realized gains or losses during the three months ended April 30, 2022.
The following table presents the contractual maturities of the Company’s short-term investments as of April 30, 2022 (in thousands):
April 30, 2022
Amortized CostEstimated Fair Value
Due within one year$184,237 $184,027 
Due between one to five years23,086 22,954 
Total$207,323 $206,981 
As of January 31, 2022, the Company did not hold any available-for-sale securities.

13

SMARTSHEET INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
7. Fair Value Measurements
Assets and liabilities recorded at fair value in the condensed consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The lowest level of significant input determines the placement of the fair value measurement within the following hierarchical levels:
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs that are supported by little or no market activity.
Assets and liabilities measured at fair value on a recurring basis
The following tables present information about the Company’s financial assets and liabilities that are measured at fair value and indicate the fair value hierarchy of the valuation inputs used (in thousands):
April 30, 2022
Level 1Level 2Level 3Total
Assets
  Cash equivalents:
    Money market funds$161,162 $ $ $161,162 
    Corporate bonds 9,526  9,526 
Total cash equivalents161,1629,5260170,688
  Short-term investments:
    Corporate bonds 66,826  66,826 
    U.S. Treasury securities 97,398  97,398 
    Commercial paper 42,757  42,757 
Total short-term investments 206,981  206,981 
Total assets$161,162 $216,507 $ $377,669 
January 31, 2022
Level 1Level 2Level 3Total
Assets
Cash equivalents:
Money market funds$378,294 $ $ $378,294 
Total assets$378,294 $ $ $378,294 
The carrying amounts of certain financial instruments, including cash held in banks, accounts receivable, and accounts payable, approximate fair value due to their short-term maturities and are excluded from the fair value tables above.
14

SMARTSHEET INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
It is the Company’s policy to recognize transfers of assets and liabilities between levels of the fair value hierarchy at the end of a reporting period. The Company does not transfer out of Level 3 and into Level 2 until observable inputs become available and reliable. There were no transfers between fair value measurement levels during the three months ended April 30, 2022 and 2021.
Assets and liabilities measured at fair value on a non-recurring basis
See Note 8, Goodwill and Net Intangible Assets, of these notes to our condensed consolidated financial statements for fair value measurements of certain assets and liabilities recorded at fair value on a non-recurring basis.

8. Goodwill and Net Intangible Assets
There were no changes in the carrying amount of goodwill or measurement period adjustments during the three months ended April 30, 2022.
The following table presents the components of net intangible assets (in thousands):
April 30, 2022
January 31, 2022
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Acquired software technology$25,400 $(10,465)$14,935 $25,400 $(9,195)$16,205 
Acquired customer relationships32,150 (8,837)23,313 32,150 (7,735)24,415 
Trade names4,100 (823)3,277 4,100 (711)3,389 
Patents170 (129)41 170 (127)43 
Domain name44  44 44  44 
Total$61,864 $(20,254)$41,610 $61,864 $(17,768)$44,096 
The components of acquired intangible assets as of the periods presented were as follows (dollars in thousands):
April 30, 2022
January 31, 2022
Net Carrying AmountWeighted Average Life (Years)Net Carrying AmountWeighted Average Life (Years)
Acquired software technology$14,935 3.1$16,205 3.3
Acquired customer relationships23,313 5.324,415 5.5
Trade names3,277 7.43,389 7.6
Total$41,525 4.7$44,009 4.9
Amortization expense related to intangible assets was $2.5 million in each of the three months ended April 30, 2022 and 2021. As of April 30, 2022, estimated remaining amortization expense for the finite-lived intangible assets by fiscal year is as follows (in thousands):
Remainder of Fiscal 2023$7,456 
Fiscal 20249,942 
Fiscal 20258,740 
Fiscal 20267,023 
Fiscal 20274,858 
Thereafter3,547 
Total$41,566 

15

SMARTSHEET INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
9. Share-Based Compensation
The Company has issued incentive and non-qualifying stock options to employees and non-employee directors under the 2005 Stock Option/Restricted Stock Plan, the 2015 Equity Incentive Plan (the “2015 Plan”), and the 2018 Equity Incentive Plan (the “2018 Plan”).
The Company has also issued restricted stock units (“RSUs”) to employees and non-employee directors pursuant to the 2015 Plan and the 2018 Plan.
The Company has issued restricted stock awards (“RSAs”) to certain Brandfolder employees subject to vesting conditions. These shares were issued in a private placement transaction. As vesting of these RSAs is dependent on continuous employment, these were not considered part of the purchase price in accounting for the September 2020 acquisition.
Employee stock options are granted with exercise prices at the fair value of the underlying common stock on the grant date, in general vest based on continuous employment over four years, and expire 10 years from the date of grant. Employee RSUs are measured based on the grant date fair value of the awards and in general vest based on continuous employment over four years. The RSAs are measured based on the grant date fair value of the awards and vest over a three-year period.
Stock options
The following table includes a summary of the option activity during the three months ended April 30, 2022:
Options OutstandingWeighted-Average Exercise Price
Outstanding at January 31, 20224,573,482 $20.87 
Granted3,744 52.72 
Exercised(284,137)13.61 
Forfeited or canceled(31,735)47.03 
Outstanding at April 30, 20224,261,354 21.19 
Exercisable at April 30, 20223,421,858 11.75 
16

SMARTSHEET INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Restricted stock units
The following table includes a summary of the RSU activity during the three months ended April 30, 2022:
Number of Shares Underlying Outstanding RSUsWeighted-Average Grant-Date Fair Value per RSU
Outstanding at January 31, 20227,281,232 $60.95 
Granted1,142,315 53.60 
Vested(793,111)56.48 
Forfeited or canceled(322,873)59.42 
Outstanding at April 30, 20227,307,563 60.37 
Restricted stock awards
The following table includes a summary of the RSA activity during the three months ended April 30, 2022:
Number of Shares Weighted-Average Grant-Date Fair Value per Share
Outstanding at January 31, 202256,288 $46.93 
Granted  
Vested  
Forfeited or canceled  
Outstanding at April 30, 202256,288 46.93 
2018 Employee Stock Purchase Plan
In April 2018, we adopted our 2018 Employee Stock Purchase Plan (“ESPP”). The ESPP became effective on April 26, 2018, with the effective date of our initial public offering.
Under our ESPP, eligible employees are able to acquire shares of our Class A common stock by accumulating funds through payroll deductions of up to 15% of their compensation, subject to plan limitations. Purchases are accomplished through participation in discrete offering periods. Each offering period is six months (commencing each January 1 and July 1) and consists of one six-month purchase period, unless otherwise determined by our board of directors or our compensation committee. The purchase price for shares of our common stock purchased under our ESPP is 85% of the lesser of the fair market value of our common stock on (i) the first trading day of the applicable offering period or (ii) the last trading day of the purchase period in the applicable offering period.
17

SMARTSHEET INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Shares available for issuance
The following table includes a summary of the activity during the three months ended April 30, 2022 of our shares available for issuance under our 2018 Plan and our ESPP:
2018 Plan2018 ESPP
Balance at January 31, 202215,067,025 4,040,430 
Authorized6,390,477 1,278,096 
Granted(1,146,059) 
Forfeited or canceled354,608  
Balance at April 30, 202220,666,051 5,318,526 
The aggregate number of shares reserved for issuance under our ESPP will increase automatically on February 1 of each of the first 10 calendar years after the first offering date under the ESPP by the number of shares equal to 1% of the total outstanding shares of our Class A common stock and Class B common stock as of the immediately preceding January 31 (rounded to the nearest whole share) or such lesser number of shares as may be determined by our board of directors in any particular year. The aggregate number of shares issued over the term of our ESPP, subject to stock-splits, recapitalizations or similar events, may not exceed 20,400,000 shares of our Class A common stock.
As of April 30, 2022, $8.9 million has been withheld on behalf of our employees for a future purchase under the ESPP and is recorded in accrued compensation and related benefits in the condensed consolidated balance sheets.
Share-based compensation expense
Share-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands):
Three Months Ended April 30,
20222021
Cost of subscription revenue$2,611 $1,495 
Cost of professional services revenue1,477 673 
Research and development15,615 8,307 
Sales and marketing14,745 8,656 
General and administrative9,452 4,728 
Total share-based compensation expense$43,900 $23,859 
We have excluded $0.7 million and $0.4 million of capitalized software development costs from share-based compensation expense in the three months ended April 30, 2022 and 2021, respectively.

10. Income Taxes
The provision for income taxes for interim tax periods is generally determined using an estimate of the Company’s annual effective tax rate, excluding jurisdictions for which no tax benefit can be recognized due to valuation allowances, and adjusted for discrete tax items in the period. Each quarter the Company updates its estimate of the annual effective tax rate and makes a cumulative adjustment if the estimated annual tax rate has changed.
 The Company’s effective tax rate generally differs from the U.S. federal statutory tax rate primarily due to a valuation allowance related to the Company’s U.S. federal, state, and certain foreign deferred tax assets.
18

SMARTSHEET INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The Company recorded a provision for income taxes of $0.2 million and less than $0.1 million for the three months ended April 30, 2022 and 2021, respectively, primarily attributable to income taxes in foreign jurisdictions and state income taxes.

11. Leases
The Company has operating leases primarily related to corporate offices and certain equipment. Our leases have remaining lease terms of less than 1 year to 7 years, some of which include options to extend the leases for up to 5 years.
The components of lease expense recorded in the condensed consolidated statements of operations were as follows (in thousands):
Three Months Ended April 30,
20222021
Operating lease cost$4,879 $4,532 
Short-term lease cost129 343 
Variable lease cost567 588 
Total lease costs$5,575 $5,463 
Other information related to leases was as follows (dollars in thousands):
Three Months Ended April 30,
20222021
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases*$4,652 $4,100 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$4,464 $ 
Weighted-average remaining lease term (in years):
Operating leases4.96.0
Weighted-average discount rate:
Operating leases4.9 %5.1 %
*Includes cash paid for lease liability accretion of $0.9 million and $1.1 million for the three months ended April 30, 2022 and 2021, respectively.
As of April 30, 2022, remaining maturities of lease liabilities were as follows (in thousands):
Operating Leases
Remainder of Fiscal 2023$14,746 
Fiscal 202420,115 
Fiscal 202516,037 
Fiscal 202613,298 
Fiscal 20279,991 
Thereafter11,467 
Total lease payments85,654 
Less: imputed interest(9,176)
Total$76,478 
19

SMARTSHEET INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

12. Commitments and Contingencies
Legal matters
An indemnification claim was made against the Company by a former director, Ryan Hinkle, and Insight Venture Partners VII, L.P. and certain affiliated entities that are former shareholders of the Company (together with Hinkle, the “IVP Parties”), relating to a purported class action litigation in which the IVP Parties are defendants. On January 29, 2021, the IVP Parties filed a complaint against the Company in the Superior Court of Washington, King County, for the advancement of legal fees, costs, and expenses incurred in defending the purported class action claim. In December 2021, we paid $10.0 million as part of an overall settlement of these matters. We do not expect any additional losses related to this case that would have a material impact on our financial position, results of operations, or cash flows.
From time-to-time, in the normal course of business, the Company may be subject to various other legal matters such as threatened or pending claims or proceedings. Although management currently believes that resolution of such matters, individually and in the aggregate, will not have a material impact on our financial position, results of operations, or cash flows, these matters are subject to inherent uncertainties, and management’s view of these matters may change in the future.

13. Geographic Information
Revenue
Revenue by geographic location is determined by the location of the Company’s customers. The following table sets forth revenue (in thousands) by geographic area:
Three Months Ended April 30,
20222021
United States$139,694 $96,403 
EMEA15,285 11,061 
Asia Pacific6,534 4,454 
Americas other than the United States6,797 5,164 
Total$168,310 $117,082 
No individual country other than the United States contributed more than 10% of total revenue during any of the periods presented.
Long-lived assets
Long-lived assets by geographic location is based on the location of the legal entity that owns the asset. The following table sets forth long-lived assets by geographic area (in thousands):
April 30, 2022January 31, 2022
United States$76,948 $79,278 
EMEA7,320 3,828 
Asia Pacific789 1,153 
Americas other than the United States50 28 
Total$85,107 $84,287 
The table above includes property and equipment and operating lease right-of-use assets and excludes capitalized internal-use software costs and intangible assets.
20

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended January 31, 2022. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including but not limited to those discussed in the section titled “Risk Factors” and in other parts of this Quarterly Report on Form 10-Q. Our fiscal year ends January 31.
Overview
Smartsheet is the enterprise platform for dynamic work. We empower anyone to drive meaningful change. Our leading cloud-based platform enables teams and organizations to plan, capture, manage, automate, and report on work at scale, resulting in more efficient processes and better business outcomes. We were founded in 2005 with a vision to build a universal application for work management that does not require coding capabilities.
Unstructured or dynamic work is work that has historically been managed using a combination of email, spreadsheets, whiteboards, phone calls, and in-person meetings to communicate with team members and complete projects and processes. It is frequently changing, often ad-hoc, and highly reactive to new information. Our platform helps manage this kind of unstructured work and serves as a single source of truth across work processes, fostering accountability and engagement within teams, leading to more efficient decision-making and better business outcomes.
We generate revenue primarily from the sale of subscriptions to our cloud-based platform. For subscriptions, customers select the plan that meets their needs and can begin using Smartsheet within minutes. We offer three subscription levels to new customers: Pro, Business, and Enterprise, the pricing for which varies by the capabilities provided. Customers can also purchase Smartsheet Advance, which provides components that, in combination, enable customers to implement solutions for a specific use case or for large scale projects, initiatives, or processes. Some components are available for standalone purchase, including Connectors, which provide data integration and automation to third-party applications, and premium applications such as Dynamic View, Data Shuttle, Control Center, and Bridge. Additional subscriptions that can be integrated with our cloud-based platform include Resource Management, a resource planning solution that helps businesses find and schedule appropriate project teams, track and manage time, and forecast hiring needs; and Brandfolder, a digital asset management platform that enables workers to intuitively store, customize, and share creative assets. Professional services are offered to help customers create and administer solutions for specific use cases and for training purposes.
Customers can begin using our platform by purchasing a subscription directly from our website or through our sales force, starting a free trial, or working as a collaborator on a project.
21

Impact of COVID-19
The novel coronavirus disease (“COVID-19”) continues to impact the global economy. The extent to which COVID-19 may impact our financial conditions or result of operations in future periods remains uncertain. However, the transition to a digital-first world has emphasized the importance of cloud-based work management solutions such as our own, and the need to reimagine the way employees engage with each other and customers. We continue to prioritize the health and safety of our employees, customers, and community. As of April 30, 2022, our offices have remained open in accordance with applicable regional guidance and remote work options are available to the majority of our employees. We continue to host many employee and customer activities and events virtually, and, where it is safe to do so, we have resumed some in-person activities and events. As health and safety conditions allow, we expect to increase in-person activities and events in fiscal year 2023, which will increase marketing and travel costs from prior year levels. We will continue to actively monitor the COVID-19 situation and may take further actions that alter our business operations, as may be required by federal, state, or local authorities, or that we determine are in the best interests of our employees, customers, partners, suppliers, and shareholders. Refer to Part II, Item 1A, Risk Factors for further discussion of the impact and possible future impacts of the COVID-19 pandemic on our business.
Key Business Metrics
We review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.
April 30, 2022
20222021
Average annualized contract value per domain-based customer$7,210 $5,461 
Dollar-based net retention rate for all customers (trailing 12 months)133 %125 %
Customers with annualized contract values (“ACV”) of $100 thousand or more1,108 661 
Customers with ACV of $50 thousand or more2,516 1,674 
Customers with ACV of $5 thousand or more15,879 12,655 
Average ACV per domain-based customer
We use average annualized contract value (“ACV”) per domain-based customer to measure customer commitment to our platform and sales force productivity. We define 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 define 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 (“Prior Period ACV”). We then calculate the ACV from these same customers as of the current period end (“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 affect the dollar-based net retention rate until one year from the date on which the transaction closed.
The dollar-based net retention rate is used by us to evaluate the long-term value of our customer relationships and is driven by our ability to retain and expand the subscription revenue generated from our existing customers.
22

Components of Results of Operations
Revenue
Subscription revenue
Subscription revenue primarily consists of fees from customers for access to our cloud-based platform. We recognize subscription revenue ratably over the subscription contract term beginning on the date access to our platform is provided, as no implementation work is required, assuming all other revenue recognition criteria have been met.
Professional services revenue
Professional services revenue primarily includes fees for consulting and training services. Our consulting services typically consist of platform configuration and use case optimization, and are primarily invoiced on a time and materials basis, with some smaller engagements being provided for a fixed fee. We recognize revenue for our consulting services as those services are delivered. Our training services are delivered either remotely or at the customer site. Training services are charged for on a fixed-fee basis and we recognize revenue as the training program is delivered. Our consulting and training services are generally considered to be distinct, for accounting purposes, and we recognize revenue as services are performed or upon completion of work.
Cost of revenue and gross margin
Cost of subscription revenue
Cost of subscription revenue primarily consists of expenses related to hosting our services and providing support, including employee-related costs such as salaries, wages, and related benefits, third-party hosting fees, amortization of capitalized software, software-related costs, amortization of acquisition-related intangibles, payment processing fees, costs of outside services to supplement our internal teams, allocated overhead, costs of Connectors between Smartsheet and third-party applications, and costs related to technical support services.
Cost of professional services revenue
Cost of professional services revenue consists primarily of employee-related costs for our consulting and training teams, costs of outside services to supplement our internal teams, allocated overhead, software-related costs, travel-related expenses, and billable expenses.
Gross margin
Gross margin is calculated as gross profit expressed as a percentage of total revenue. Our gross margin may fluctuate from period to period as our revenue mix fluctuates, and as a result of the timing and amount of investments to expand our hosting capacity, our continued building of application support and professional services teams, and increased share-based compensation expense. While we continue to build our technology to expand to newer markets and geographies, we expect our gross margin to decline moderately.
Operating expenses
Research and development
Research and development expenses consist primarily of employee-related costs, software-related costs, costs of outside services used to supplement our internal staff, and allocated overhead. We consider continued investment in our development talent and our platform to be important for our growth. We expect our research and development expenses to increase in absolute dollars as our business grows and to gradually decrease over the long-term as a percentage of total revenue due to economies of scale.
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Sales and marketing
Sales and marketing expenses consist primarily of employee-related costs, brand awareness and demand generation costs, allocated overhead, travel-related expenses, costs of outside services used to supplement our internal staff, software-related costs, amortization of acquisition-related intangibles, and amortization of capitalized software. Commissions earned by our sales force that are incremental to each customer contract, along with related fringe benefits and taxes, are capitalized and amortized over an estimated useful life of three years. We expect that sales and marketing expenses will increase in absolute dollars as we continue to invest in employee-related costs, brand awareness, and demand generation costs. We expect sales and marketing costs to gradually decrease as a percentage of total revenue over the long-term due to economies of scale.
General and administrative
General and administrative expenses consist primarily of employee-related costs for accounting, finance, legal, IT, and human resources personnel. In addition, general and administrative expenses include costs of outside services to supplement our internal staff, software-related costs, allocated overhead, certain tax, license, and insurance-related expenses, non-personnel costs, such as accounting and legal costs, bank charges, and bad debt expense. We expect our general and administrative expenses to increase in absolute dollars as our business grows, and to gradually decrease over the long-term as a percentage of total revenue due to economies of scale.
Interest income
Interest income consists of interest income from our investment holdings.
Other income (expense), net
Other income (expense), net consists of foreign exchange gains and losses, interest expense, and other non-operating income and expenses.
Income tax provision (benefit)
Income tax provision (benefit) consists primarily of income taxes in foreign jurisdictions and state income taxes. We maintain a valuation allowance on our U.S. federal, state, and certain foreign deferred tax assets as we have concluded that it is not more likely than not that the deferred assets will be realized.
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Results of Operations
The following tables set forth our results of operations for the periods presented and as a percentage of our total revenue for those periods:
Three Months Ended April 30,
20222021
(in thousands)
Revenue
Subscription$155,276 $108,013 
Professional services13,034 9,069 
Total revenue168,310 117,082 
Cost of revenue
Subscription(1)
25,138 18,563 
Professional services(1)
12,020 8,009 
Total cost of revenue37,158 26,572 
Gross profit131,152 90,510 
Operating expenses
Research and development(1)
52,519 36,474 
Sales and marketing(1)
115,391 71,379 
General and administrative(1)
33,044 21,018 
Total operating expenses200,954 128,871 
Loss from operations(69,802)(38,361)
Interest income388 11 
Other income (expense), net(828)1,327 
Loss before income tax provision(70,242)(37,023)
Income tax provision215 49 
Net loss$(70,457)$(37,072)
(1)    Amounts include share-based compensation expense as follows:
Three Months Ended April 30,
20222021
(in thousands)
Cost of subscription revenue$2,611 $1,495 
Cost of professional services revenue1,477 673 
Research and development15,615 8,307 
Sales and marketing14,745 8,656 
General and administrative9,452 4,728 
Total share-based compensation expense$43,900 $23,859 

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Three Months Ended April 30,
20222021
Revenue
Subscription92 %92 %
Professional services
Total revenue100 100 
Cost of revenue
Subscription15 16 
Professional services
Total cost of revenue22 23 
Gross profit78 77 
Operating expenses
Research and development31 31 
Sales and marketing69 61 
General and administrative20 18 
Total operating expenses119 110 
Loss from operations(41)(33)
Interest income— — 
Other income (expense), net— 
Loss before income tax provision(42)(32)
Income tax provision— — 
Net loss(42)%(32)%
Note: Certain amounts may not sum due to rounding.
Comparison of the three months ended April 30, 2022 and 2021
Revenue
Three Months Ended April 30,Change
20222021Amount%
(dollars in thousands)
Revenue
Subscription$155,276 $108,013 $47,263