Smartsheet Inc.

Second quarter revenue was $235.6 million, up 26% year over year. Subscription revenue was $221.5 million, up 28%, and services revenue was $14.1 million, up 7%. Billings were $243.1 million, up 18% year over year. Total gross margin was 83%, subscription gross margin was 87%, and non-GAAP operating income was $19.2 million, or 8% of revenue; free cash flow was $45.5 million. ARR ended at $933 million, up 27%, and diluted non-GAAP EPS was not stated for Q2. For Q3, management guided revenue to $240 million to $242 million, non-GAAP operating income to $8 million to $10 million, and non-GAAP EPS to $0.08 to $0.09. For FY24, management raised revenue guidance to $950 million to $953 million, expects non-GAAP operating income of $62 million to $67 million, non-GAAP EPS of $0.53 to $0.57, reiterated billings growth of 20%, and lifted free cash flow guidance to $120 million.

Mark Mader emphasized that Smartsheet is gaining share in enterprise work management and that customer use cases are expanding beyond seat-based usage into a broader platform story. He highlighted strong enterprise expansion, large deals, and the rollout of capabilities, self-discovery, and generative AI features as ways to deepen value and drive future conversion. His tone was upbeat but measured, repeatedly noting that these newer monetization levers are not yet baked into the second-half numbers.

Pete Godbole said the company outperformed guidance across the board, with ARR up 27% to $933 million and free cash flow of $45.5 million in Q2, bringing first-half free cash flow to nearly $77 million. He pointed to 83% total gross margin, 87% subscription gross margin, 121% NRR, and 4% full churn, while also flagging that budget caution is still pressuring high-velocity transactions and sales-cycle duration. He guided Q3 free cash flow to around $5 million due to one-time cash outflows, and said FY24 gross margin should remain at or above 82%, with FY24 free cash flow raised to $120 million.

Analysts focused on Cisco rumors, billings cadence, AI monetization, NRR, and whether enterprise improvement was broad-based or just a rebound. Management rejected the Cisco migration report and said Cisco signed a multiyear, multimillion-dollar extension in Q2, while also saying there was no pull-forward in Q2 billings. On AI, management said interest is strong, but GA timing is not set and no revenue from AI or self-discovery is in the back-half guide; they expect monetization benefits more in FY25 than FY24.