Smartsheet Inc. Reports Thriving Q3 Fiscal Year 2025 Earnings
Smartsheet Inc. Reports Thriving Q3 Fiscal Year 2025 Earnings
Smartsheet Inc. (NYSE: SMAR), a leader in enterprise work management solutions powered by AI, has recently unveiled its financial results for the third quarter of fiscal year 2025, closed on October 31, 2024. The results reflect a noteworthy growth trajectory as the company continues to enhance its offerings and deepen its market penetration.
Financial Highlights for the Third Quarter
The numbers speak for themselves this quarter. Smartsheet reported total revenue of $286.9 million, representing a substantial increase of 17% year-over-year. The subscription revenue, a key indicator of the company's ongoing strength and commitment to its SaaS model, reached $273.7 million, marking an 18% growth from the previous year. However, the professional services revenue saw a slight decline, totaling $13.2 million, which is a 2% decrease annually.
Operating Income and Cash Flow Performance
In terms of profitability, Smartsheet recorded a GAAP operating loss of $(3.4) million, which translates to (1)% of total revenue, a significant improvement compared to a loss of $(35.5) million, or (14)% of revenue in the same quarter last year. Notably, the non-GAAP operating income painted a more optimistic picture, coming in at $56.4 million, or 20% of total revenue, compared to $19.4 million or 8% in Q3 of the prior fiscal year.
The net income attributable to Smartsheet was reported at $1.3 million, which is quite the turnaround compared to a net loss of $(32.4) million in Q3 of the previous year. Basic and diluted net income per share was $0.01, recovering from a negative $(0.24) last year. The non-GAAP net income stood at $61.0 million, significantly higher than $22.6 million in the corresponding period last year, which translates to non-GAAP earnings per share of $0.44 and $0.43 for basic and diluted shares respectively, compared to $0.17 and $0.16 last year.
Cash Flow Analysis
The cash flow metrics are equally impressive. Smartsheet's net operating cash flow has surged to $63.5 million, compared to $15.1 million from the same period last fiscal year. Furthermore, Smartsheet achieved a free cash flow of $61.8 million, constituting an impressive 22% of total revenue, up from $11.4 million or 5% of revenue in Q3 fiscal 2024.
Operational Achievements
The operational highlights from this quarter are no less compelling. Annualized recurring revenue (ARR) reached an impressive $1.133 billion, reflecting a year-over-year increase of 15%. The company has also reported that its average ARR per domain-based customer has increased to $10,708, showcasing a solid 16% growth. The dollar-based net retention rate came in at a robust 111%, underscoring the company's strong customer loyalty and satisfaction.
In terms of customer growth, Smartsheet now boasts 2,137 customers with ARR of $100,000 or more, an impressive climb of 20% year-over-year. Also, the count of customers with ARR exceeding $50,000 rose to 4,293, marking a 15% increase, while the number of customers with an ARR of at least $5,000 climbed to 20,430, a more modest growth of 5%.
Acquisition News and Business Development
A key reason behind the optimism surrounding Smartsheet is the announcement regarding its acquisition by Blackstone and Vista Equity Partners. The deal, valued at approximately $8.4 billion, positions Smartsheet for significant growth and operational efficiency amid its ongoing transformation. This acquisition aims to bolster Smartsheet's market capabilities significantly, providing additional resources to enhance the product offering.
In addition, Smartsheet has celebrated the success of its U.S. ENGAGE customer conference, which welcomed over 4,000 attendees and featured more than 60 breakout sessions. The company also unveiled a comprehensive transformation of its user experience and product features designed to empower teams in their collaborative efforts.
Regarding technology improvements, Smartsheet introduced an AI-powered connector for Amazon Q Business, promoting better integration and data visibility for users navigating operational challenges.
Final Notes
While Smartsheet has demonstrated a solid financial and operational performance in the third quarter, we must maintain awareness of the broader market and competitive landscape. The ongoing integration with Blackstone and Vista Equity Partners presents both opportunities and challenges as Smartsheet continues to evolve its offerings and operational strategies.
Frequently Asked Questions
What were the revenue figures for Smartsheet in Q3 2025?
Smartsheet reported total revenue of $286.9 million in Q3 2025, an increase of 17% year-over-year.
How did the company's net income compare to the previous year?
The net income was $1.3 million, a significant recovery from a loss of $(32.4) million in the same quarter of the previous fiscal year.
What is Smartsheet's projected annualized recurring revenue (ARR)?
Smartsheet's annualized recurring revenue (ARR) reached $1.133 billion, representing a 15% increase year-over-year.
What key acquisition did Smartsheet announce?
Smartsheet announced that it entered into a definitive agreement to be acquired by Blackstone and Vista Equity Partners for approximately $8.4 billion.
What improvements were made in Smartsheet's customer engagement efforts?
Smartsheet hosted its U.S. ENGAGE customer conference, attracting over 4,000 attendees and presenting over 60 breakout sessions, aiming to enhance user engagement.
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