Investor Presentation July 2018 Legal Disclosure This presentation - - PowerPoint PPT Presentation

July 2018

Investor Presentation

Legal Disclosure

This presentation contains forward-looking statements within the meaning of the federal securities laws, including statements regarding future financial performance, business strategy and objectives, potential market and growth opportunities, technological or market trends, and projected sales and customer retention rates. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, 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, assumptions, and other factors including, but not limited to, those described in our SEC filings. Moreover, we operate in a competitive and rapidly changing environment in which new risks emerge from time to

• time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination
• f factors, may cause our actual results or performance to differ materially from those contained in any forward-looking statements we may make. Although

we believe that the expectations reflected in the forward looking statements are reasonable, these and other factors may cause our actual results, performance, or achievements to differ materially and adversely from those anticipated or implied in our forward-looking statements. All forward-looking statements contained herein are based on information available to us as of the date hereof and we do not ass ume any obligation to update these statements as a result of new information or future events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. In addition to U.S. GAAP financials, this presentation includes certain non-GAAP financial measures, including non-GAAP gross margin, calculated billings, free cash flow, non-GAAP operating expenses, and non-GAAP loss per share. These non-GAAP measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP. Our non-GAAP financial measures may differ from the non-GAAP financial measures used by other companies. A reconciliation of these measures to the most directly comparable U.S. GAAP measure is included in the Appendix to these slides. Additional risks and uncertainties that could affect our financial results are included in filings we make with the SEC from time to time, including under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These filings are available on our Investor Relations website at https://investors.smartsheet.com and on the SEC website at www.sec.gov.

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A Powerful Platform for the Way You Work Today

Smartsheet is designed to unleash the benefits of greater work agility and collaboration by providing a platform for organizations to plan, capture, manage, automate, and report on work at scale.

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2017A

$17.1Bn

Collaborative Applications(1)

2021E

$26.1Bn

2021E

$5.5Bn

2017A

$4.3Bn

Project and Portfolio Management(1)

865M knowledge workers(2) 3.0M collaborators(3) 650k+ paying users(3)

Available Market: $21+ Billion and Nearly 1 Billion Users

Notes

• 1. International Data Corporation, Semiannual Software Tracker, November 2017.
• 2. Forrester Research, Inc., Info Workers Will Erase The Boundary Between Enterprise

and Consumer Technologies, August 30, 2012.

• 3. As of January 31, 2018.

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Work that has traditionally been managed using email, docs, and spreadsheets Clearly-defined, repeatable processes that naturally fit into a system

Structured Unstructured or Dynamic

40% 60% (1)

ERP: Manage and Store Financial Data CRM: Record a Sales Transaction HCM: Manage Employee Performance Reviews ITSM: IT Ticketing and Help Desk Management SCM: Supply Chain Management Contract management Brand launches Event planning Travel scheduling Employee onboarding M&A integration Parts ordering Budget approvals Compliance Case management Invoice Tracking Website Management

How Work Gets Done Today

Notes

• 1. Gartner, Inc., Effortless Visibility Is Key to Managing Empowered Workers Without Losing Control, March 30, 2017.

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Technical Expertise is an Impediment to Scaling with Existing Solutions

No-Code Solutions for Business Users and Dynamic Use Cases

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Project Management IT Administrative Human Resources Marketing Engineering Sales Finance

Lead assignment Sales enablement Pipeline management Contract management Software migration Help desk IT ticketing Managing development Schedule deliveries Track invoices Sales operations Vendor requests Feature development Bug tracking Case management Product initiation Commissions calculation M&A integration Travel scheduling Meeting scheduling Compliance Audit preparation Purchase orders Expense approvals Budget approvals Issue escalation Assign tickets Schedule employees Returns processing

Operations Customer Service Legal Industry Verticals

Manage brand launches Investor relations Event planning Website management Employee onboarding Off-boarding processing Talent acquisition Benefit tracking Claims adjusting Clinical trial tracking Parts ordering Contractor scheduling Property management Patent app processing Case management Client onboarding Due diligence review Transaction management

Over 2,000 Documented Use Cases AcrossAll Departments

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Notes Reflects adoption within a Fortune 100 multinational customer over time. Statistics as of March 31, 2018.

• Oct. 2013
• Sept. 2014

June 2015 July 2017

• Feb. 2016

March 2018

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First introduced to global operations team

431

IT adopts for global projects: VOIP and ERP

1,800

M&A team uses for acquisitions/ divestitures

5,914

Smartsheet auto - provisioning turned on, licenses instantly available

4,184

Marketing starts using for project management

22,801

Rapid expansion into finance, HR, procurement

46,610

Deployed across all 11 business units

64,497

Continued Expansion

93 193 323 1,369 3,211 5,364 INTERNAL USERS EXTERNAL PARTNERS & VENDORS

• Nov. 2016
• Dec. 2015

Demonstrated Value Leads to Increased Adoption within the Enterprise

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The Smartsheet Platform for Work Execution

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Capture

Information collected in a structured and consistent format

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Capture

Premium Connectors Free Out-of-the Box Integrations APIs for Custom Integrations

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Unified view of work to keep teams on task and on time by easily tracking multiple moving parts Visualization tool for teams to organize, share, and act on workflows

Plan & Manage

Align teams and organizations by connecting deadlines to workflows

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Single source of truth for all project-related info Interactive, comprehensive view keeps projects on track

Plan & Manage

Align teams and organizations by connecting deadlines to workflows

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Automate

+

Deadline notifications Status updates Approval requests

Automated actions triggered based on preset conditions

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Report

Real-time visibility into the status of work Landing pages for teams to easily locate and access resources available

Real-time visibility into work enables faster, more informed decision-making

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Scale

Consistency of work execution with reduced operational risk

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Inside Sales Self Service Strategic Sales Lead Scoring + Machine Learning

100,000+ Free Trial Users/month

Integrated Content Pay-per-Click Website Collaborators

(1)

Efficient Customer Acquisition Model

Notes

• 1. During January 2017 to December 2017.

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Augment partnerships and integrations Expand within existing customer base Invest in international growth Enhance product features and functionality Attract more customers

Growth Vectors

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Experienced Leadership Team

Mark Mader

Chief Executive Officer

Jennifer Ceran

Chief Financial Officer

Mike Arntz

Senior VP of Worldwide Field Operations

Gene Farrell

Senior VP

• f Product

Kara Hamilton

Senior VP

• f People Operations

Andrew Lientz

Senior VP

• f Engineering

Paul Porrini

General Counsel

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Notes

• 1. Figures as of April 30, 2018 unless stated otherwise.
• 2. We calculate dollar-based net retention rate as of a period end by starting with the Annualized Contract Value, or ACV, from the cohort of all customers as of the 12 months prior to such period end, or Prior Period ACV. We then calculate the ACV

from these same customers as of the current period end, or 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.

• 3. Payback period = 12 / [( (Y1 subscription revenue – Y0 subscription revenue) x subscription margin) / Y0 S&M Expense] and exc

ludes share-based compensation expense.

• 4. We calculate the magic number as year-over-year dollar increase in subscription revenue divided by the prior year’s non-GAAP sales and marketing expense. Non-GAAP sales and marketing expense excludes share based compensation.
• 5. As of April 30, 2018. ACV growth is year-over-year increase in average ACV per domain-based customer.

Revenue

$111M FY18 $36.3M Q1:19

Rapid revenue growth

63% Q1:19 (YoY)

Strong retention rates

130%

Dollar-based Net Retention Rate(2)

Unit economics support investment in growth Large customer base with increasing ACV Attractive gross margin

Payback(3) Magic Number(4) Domain-Based Customers ACV Growth(5)

80%

Key Financial Highlights(1)

GAAP Gross Margin

47% 75K+ 0.92x 15mos

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Q1:17 Q2:17 Q3:17 Q1:18 Q2:18 Q4:17

Strong Revenue Growth...

Quarterly Revenue ($M)

FY18 FY16

Annual Revenue ($M)

Q3:18 Q4:18 Q1:19

$14 $16 $18 $22 $27 $20 $29 $33 $36 $41

FY17

$67 $111 21

… Driven by Customer Growth and Expansion

(1) Domain customers are all customers with a unique domain name. This excludes ISP customers of 18K. (2) Average annualized contract value (ACV) is the annualized subscription value for domain customers over the number of domain customers. (3) Dollar retention rate is defined as the net % of ACV retained from all customers, after expansion, reductions and cancellations as of the end of the quarter. This metric is calculated by dividing total customers’ ACV as of the end of the fiscal quarter by their ACV 12 months ago. Includes domain customers and ISP customers. 22

Investing in our Opportunity

Prior to our IPO we had raised approximately $113M and had $50M in cash remaining on our balance sheet at the end of Q1:19. We added an additional $164M to

• ur balance sheet on May 1

with proceeds from our initial public offering.

Notes

• 1. Free cash flow is a non-GAAP measure calculated as operating cash flow less CAPX and principal payments on capital leases. Please refer to the

Appendix for the reconciliation of free cash flow to net cash provided by (used in) operating activities.

FY17 FY18 Free Cash Flow Operating Cash Flow Revenue

($2.1) $0.1 $67.0 $111.3 ($25.3) ($13.6) 23

Q1:19

$36.3 ($9.7) ($8.2)

Revenue, Operating Cash Flow, and Free Cash Flow in $M(1)

Long Term Target Model(1), (2)

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FY17 FY18 Q1:19 Target Ranges

Subscription Margin 84% 87% 87% Professional Services Margin 12% 21% 29% Total Gross Margin 79% 81% 80% 78-80% R&D as a % of Revenue 29% 28% 34% 13-15% S&M as a % of Revenue 59% 64% 60% 37-39% G&A as a % of Revenue 12% 16% 17% 6-8% Operating Margin (21%) (27%) (30%) 20%+ FCF Margin (3%) (23%) (27%) 20%+

Notes

• 1. All results presented are non-GAAP. They exclude:

a) Share-based compensation b) Amortization of acquisition-related intangible assets c) One-time costs of acquisitions

• 2. Please refer to Appendix for the reconciliation of non-GAAP operating expenses to operating expenses.

Appendix

Consolidated Statement of Operations

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Consolidated Balance Sheets

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Consolidated Balance Sheets (continued)

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Consolidated Statements of Cash Flows

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Reconciliation from GAAP to Non-GAAP Gross Profit and Gross Margin

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Reconciliation from GAAP to Non-GAAP Operating Loss and Operating Margin

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Reconciliation from GAAP to Non-GAAP Net Loss

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Reconciliation from GAAP to Non-GAAP Weighted Average Shares Outstanding (Basic and Diluted)

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Anti-Dilutive Shares at Period End

An additional 11,745,088 shares were issued in the initial public offering which closed on May 1, 2018

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Reconciliation from Net Operating Cash Flow to Free Cash Flow

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Reconciliation from Revenue to Calculated Billings

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Reconciliation from GAAP to Non-GAAP Operating Loss Guidance

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Reconciliation from GAAP to Non-GAAP Net Loss Guidance

Q2 GAAP weighted average basic shares estimated to be 102M Full year GAAP weighted average basic shares estimated to be 82M

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