Smartsheet (SMAR) Q3 2025 earnings summary

Executive summary

• Revenue for Q3 FY2025 was $286.9M, up 17% year-over-year, driven by 18% growth in subscription revenue; net income reached $1.3M, a turnaround from a $32.4M net loss in Q3 FY2024.

• Entered into a definitive agreement to be acquired by Blackstone, Vista, and ADIA affiliates in an all-cash transaction valued at $8.4B, or $56.50 per share; the merger is expected to close in Q4 FY2025.

• Annualized recurring revenue (ARR) grew to $1.133B, up from $981M a year ago; average ARR per domain-based customer increased to $10,708.

• Non-GAAP net income reached $61.0M, up from $22.6M year over year.

• No earnings call or financial guidance provided due to the pending acquisition.

Financial highlights

• Subscription revenue for Q3 FY2025 was $273.7M, up 18% year-over-year; professional services revenue was $13.2M, down 2%.

• Gross profit for Q3 FY2025 was $233.1M, with a gross margin of 81%; subscription gross margin remained strong at 85%.

• Operating loss narrowed to $3.4M from $35.5M year-over-year; net income for the nine months ended October 31, 2024, was $0.3M, compared to a $95.7M net loss in the prior year period.

• Cash and cash equivalents totaled $454.3M, and short-term investments were $306.6M as of October 31, 2024; total liquidity was $760.9M.

• Net cash provided by operating activities for the nine months ended October 31, 2024, was $172.8M, up from $98.2M year-over-year; free cash flow margin was 22%, up from 5% in the prior year quarter.

Outlook and guidance

• The merger is expected to close in Q4 FY2025, after which Smartsheet will become a wholly owned subsidiary and its stock will be delisted.

• Management expects continued investment in product development, sales, and marketing, with operating expenses to increase in absolute dollars but decrease as a percentage of revenue over the long term.

• Macroeconomic factors such as inflation, interest rates, and geopolitical conflicts may impact future results.

• No forward-looking guidance provided due to the announced transaction.