Smartsheet (SMAR) Q2 2025 earnings summary

Executive summary

• Q2 FY25 revenue grew 17% year-over-year to $276.4 million, with subscription revenue up 19% to $263.5 million and ARR reaching $1.093 billion.

• Achieved GAAP net income of $7.9 million, reversing a net loss of $33.4 million in Q2 FY24, driven by strong subscription growth and cost management.

• Free cash flow reached a record $57.2 million, with $706.6 million in cash and investments at quarter end.

• Over 70 customers expanded ARR by more than $100,000 in the quarter, with customers over $100K ARR up 23% to 2,056.

• New pricing and packaging model launched, with positive early adoption and engagement from thousands of new customers.

Financial highlights

• Q2 revenue was $276.4 million, up 17% year-over-year; subscription revenue grew 19% to $263.5 million; professional services revenue declined 8% to $12.9 million.

• Gross margin was 84% (non-GAAP), with subscription gross margin at 87% and services gross margin at 20%.

• Non-GAAP operating income was $45.3 million (16% margin); GAAP operating loss narrowed to $8.5 million.

• Net income was $7.9 million; non-GAAP net income was $61.6 million.

• Free cash flow for Q2 FY25 was $57.2 million, representing a 21% margin.

Outlook and guidance

• FY25 revenue guidance maintained at $1.116–$1.121 billion (16–17% growth); ARR guidance updated to $1.177–$1.180 billion (14.2–14.5% growth).

• Q3 revenue expected between $282–$285 million; non-GAAP operating income $42–$44 million.

• FY25 non-GAAP operating income raised to $177–$182 million (16% margin); non-GAAP EPS raised to $1.36–$1.39.

• FY25 free cash flow guidance raised to $240 million (21% margin).

• FY25 services revenue expected to be 4.5% of total revenue, down from 5% due to more services delivered by partners.