|
|
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Washington
|
|
20-2954357
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
|
|
|
10500 NE 8
th
Street, Suite 1300
|
|
|
Bellevue, WA
|
|
98004
|
(Address of principal executive offices)
|
|
(Zip Code)
|
(844) 324-2360
|
Registrant’s telephone number, including area code
|
|
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
þ
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
Emerging growth company
|
þ
|
Table of Contents
|
Page
|
|
|
|
Three Months Ended April 30,
|
||||||
|
2018
|
|
2017
|
||||
Revenue
|
|
|
|
||||
Subscription
|
$
|
32,057
|
|
|
$
|
20,375
|
|
Professional services
|
4,262
|
|
|
1,861
|
|
||
Total revenue
|
36,319
|
|
|
22,236
|
|
||
Cost of revenue
|
|
|
|
||||
Subscription
|
4,236
|
|
|
2,989
|
|
||
Professional services
|
3,087
|
|
|
1,508
|
|
||
Total cost of revenue
|
7,323
|
|
|
4,497
|
|
||
Gross profit
|
28,996
|
|
|
17,739
|
|
||
Operating expenses
|
|
|
|
||||
Research and development
|
12,844
|
|
|
6,508
|
|
||
Sales and marketing
|
22,384
|
|
|
14,749
|
|
||
General and administrative
|
6,798
|
|
|
3,679
|
|
||
Total operating expenses
|
42,026
|
|
|
24,936
|
|
||
Loss from operations
|
(13,030
|
)
|
|
(7,197
|
)
|
||
Interest income (expense) and other, net
|
(1,300
|
)
|
|
13
|
|
||
Net loss
|
$
|
(14,330
|
)
|
|
$
|
(7,184
|
)
|
Net loss per share, basic and diluted
|
$
|
(0.68
|
)
|
|
$
|
(0.44
|
)
|
Weighted-average shares outstanding used to compute net loss per share attributable to common shareholders, basic and diluted
|
21,008
|
|
|
16,478
|
|
|
Three Months Ended April 30,
|
||||||
|
2018
|
|
2017
|
||||
Net loss
|
$
|
(14,330
|
)
|
|
$
|
(7,184
|
)
|
Other comprehensive loss:
|
|
|
|
||||
Net unrealized loss on available-for-sale securities
|
—
|
|
|
(1
|
)
|
||
Comprehensive loss
|
$
|
(14,330
|
)
|
|
$
|
(7,185
|
)
|
|
April 30, 2018
|
|
January 31, 2018
|
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
49,657
|
|
|
$
|
58,158
|
|
Accounts receivable, net of allowances of $558 and $457 at April 30, 2018 and January 31, 2018, respectively
|
18,188
|
|
|
14,870
|
|
||
Prepaid expenses and other current assets
|
5,122
|
|
|
4,628
|
|
||
Total current assets
|
72,967
|
|
|
77,656
|
|
||
Long-term assets
|
|
|
|
||||
Restricted cash
|
2,321
|
|
|
2,901
|
|
||
Deferred commissions
|
17,988
|
|
|
15,291
|
|
||
Property and equipment, net
|
16,632
|
|
|
17,237
|
|
||
Intangible assets, net
|
1,420
|
|
|
1,547
|
|
||
Goodwill
|
445
|
|
|
445
|
|
||
Other long-term assets
|
3,262
|
|
|
1,527
|
|
||
Total assets
|
$
|
115,035
|
|
|
$
|
116,604
|
|
Liabilities, convertible preferred stock, and shareholders’ deficit
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
2,911
|
|
|
$
|
2,641
|
|
Accrued compensation and related benefits
|
11,112
|
|
|
13,253
|
|
||
Other accrued liabilities
|
4,629
|
|
|
3,061
|
|
||
Capital lease payable
|
2,878
|
|
|
2,833
|
|
||
Deferred revenue
|
66,214
|
|
|
57,102
|
|
||
Total current liabilities
|
87,744
|
|
|
78,890
|
|
||
Capital lease payable, non-current
|
2,909
|
|
|
3,713
|
|
||
Deferred revenue, non-current
|
127
|
|
|
179
|
|
||
Convertible preferred stock warrant liability
|
2,598
|
|
|
1,272
|
|
||
Other long-term liabilities
|
517
|
|
|
604
|
|
||
Total liabilities
|
93,895
|
|
|
84,658
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
||||
|
|
|
|
Convertible preferred stock
|
|
|
|
||||
Convertible preferred stock, no par value; 67,756,647 shares authorized as of April 30, 2018 and January 31, 2018; 67,619,377 shares issued and outstanding with aggregate liquidation preference of $113,217 as of April 30, 2018 and January 31, 2018
|
112,687
|
|
|
112,687
|
|
||
Shareholders’ deficit:
|
|
|
|
||||
Common stock, no par value; no shares and 107,679,381 shares authorized as of April 30, 2018 and January 31, 2018, respectively; no shares and 20,280,741 shares issued and outstanding as of April 30, 2018 and January 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Class A common stock, no par value; 112,979,381 shares and no shares authorized as of April 30, 2018 and January 31, 2018, respectively; no shares issued and outstanding as of April 30, 2018 and January 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Class B common stock, no par value; 112,979,381 shares and no shares authorized as of April 30, 2018 and January 31, 2018, respectively; 22,040,029 shares and no shares issued and outstanding as of April 30, 2018 and January 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
29,414
|
|
|
25,892
|
|
||
Accumulated deficit
|
(120,961
|
)
|
|
(106,633
|
)
|
||
Total shareholders’ deficit
|
(91,547
|
)
|
|
(80,741
|
)
|
||
Total liabilities, convertible preferred stock and shareholders’ deficit
|
$
|
115,035
|
|
|
$
|
116,604
|
|
|
Three Months Ended April 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net loss
|
$
|
(14,330
|
)
|
|
$
|
(7,184
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Share-based compensation expense
|
1,842
|
|
|
545
|
|
||
Remeasurement of convertible preferred stock warrant liability
|
1,326
|
|
|
—
|
|
||
Depreciation of property and equipment
|
1,488
|
|
|
743
|
|
||
Amortization of deferred commission costs
|
1,997
|
|
|
829
|
|
||
Amortization of intangible assets
|
127
|
|
|
3
|
|
||
Amortization of premiums, accretion of discounts and gain on investments
|
—
|
|
|
18
|
|
||
Unrealized foreign exchange (gain) loss
|
61
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(3,352
|
)
|
|
(5,767
|
)
|
||
Prepaid expenses and other current assets
|
(956
|
)
|
|
(237
|
)
|
||
Other long-term assets
|
(240
|
)
|
|
(8
|
)
|
||
Accounts payable
|
237
|
|
|
(2
|
)
|
||
Other accrued liabilities
|
1,508
|
|
|
793
|
|
||
Accrued compensation and related benefits
|
(2,141
|
)
|
|
(234
|
)
|
||
Deferred commissions
|
(4,694
|
)
|
|
(2,865
|
)
|
||
Other long-term liabilities
|
(87
|
)
|
|
16
|
|
||
Deferred revenue
|
9,060
|
|
|
8,099
|
|
||
Net cash provided by (used in) operating activities
|
(8,154
|
)
|
|
(5,251
|
)
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(497
|
)
|
|
(1,304
|
)
|
||
Capitalized internal-use software development costs
|
(313
|
)
|
|
(710
|
)
|
||
Proceeds from maturity of investments
|
—
|
|
|
4,622
|
|
||
Net cash provided by (used in) investing activities
|
(810
|
)
|
|
2,608
|
|
||
Cash flows from financing activities
|
|
|
|
||||
Payments on principal of capital leases
|
(759
|
)
|
|
(485
|
)
|
||
Payments of deferred offering costs
|
(1,495
|
)
|
|
—
|
|
||
Proceeds from exercise of stock options
|
2,162
|
|
|
515
|
|
||
Net cash provided by (used in) financing activities
|
(92
|
)
|
|
30
|
|
||
Effect of foreign exchange on cash, cash equivalents, and restricted cash
|
(25
|
)
|
|
—
|
|
||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
(9,081
|
)
|
|
(2,613
|
)
|
||
Cash, cash equivalents, and restricted cash
|
|
|
|
||||
Beginning of period
|
61,059
|
|
|
24,013
|
|
||
End of period
|
$
|
51,978
|
|
|
$
|
21,400
|
|
Supplemental disclosures
|
|
|
|
|
|
||
Cash paid for interest
|
$
|
81
|
|
|
$
|
75
|
|
Accrued purchases of property and equipment (inclusive of capitalized internal-use software)
|
474
|
|
|
156
|
|
||
Deferred offering costs, accrued but not yet paid
|
883
|
|
|
—
|
|
|
As of April 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
$
|
49,657
|
|
|
$
|
19,300
|
|
Restricted cash
|
2,321
|
|
|
2,100
|
|
||
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statement of cash flows
|
$
|
51,978
|
|
|
$
|
21,400
|
|
|
Three Months Ended April 30,
|
||||||
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
||||
Net loss
|
$
|
(14,330
|
)
|
|
$
|
(7,184
|
)
|
Denominator:
|
|
|
|
||||
Weighted-average common shares outstanding
|
21,008
|
|
|
16,478
|
|
||
Net loss per share, basic and diluted
|
$
|
(0.68
|
)
|
|
$
|
(0.44
|
)
|
•
|
Level 1:
Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
•
|
Level 2:
Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
•
|
Level 3:
Unobservable inputs that are supported by little or no market activity.
|
|
April 30, 2018
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
41,357
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41,357
|
|
Restricted cash:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
—
|
|
|
1,750
|
|
|
—
|
|
|
1,750
|
|
||||
Total assets
|
$
|
41,357
|
|
|
$
|
1,750
|
|
|
$
|
—
|
|
|
$
|
43,107
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Convertible preferred stock warrant liability
|
$
|
—
|
|
|
$
|
2,598
|
|
|
$
|
—
|
|
|
$
|
2,598
|
|
|
January 31, 2018
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||
|
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
55,702
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
55,702
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Convertible preferred stock warrant liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,272
|
|
|
$
|
1,272
|
|
Balance as of January 31, 2018
|
1,272
|
|
|
Increase in fair value of convertible preferred stock warrant
|
1,326
|
|
|
Transfer out of Level 3
|
(2,598
|
)
|
|
Balance as of April 30, 2018
|
$
|
—
|
|
|
April 30,
|
|
January 31,
|
||||
|
2018
|
|
2018
|
||||
|
|
|
|
||||
Acquired software technology
|
$
|
1,366
|
|
|
$
|
1,366
|
|
Acquired customer relationships
|
70
|
|
|
70
|
|
||
Patents
|
170
|
|
|
170
|
|
||
Domain name
|
13
|
|
|
13
|
|
||
Total intangible assets
|
1,619
|
|
|
1,619
|
|
||
Less: accumulated amortization
|
(199
|
)
|
|
(72
|
)
|
||
Total intangible assets, net
|
$
|
1,420
|
|
|
$
|
1,547
|
|
|
Three Months Ended April 30,
|
||||||
|
2018
|
|
2017
|
||||
Cost of subscription revenue
|
$
|
34
|
|
|
$
|
9
|
|
Cost of professional services revenue
|
47
|
|
|
12
|
|
||
Research and development
|
665
|
|
|
149
|
|
||
Sales and marketing
|
514
|
|
|
198
|
|
||
General and administrative
|
582
|
|
|
177
|
|
||
Total share-based compensation
|
$
|
1,842
|
|
|
$
|
545
|
|
|
Options Outstanding
|
|
Weighted-Average Exercise Price
|
|||
Outstanding at January 31, 2018
|
13,355,439
|
|
|
$
|
2.91
|
|
Granted
|
4,042,420
|
|
|
10.16
|
|
|
Exercised and awarded
|
(1,759,288
|
)
|
|
0.96
|
|
|
Forfeited or canceled
|
(182,729
|
)
|
|
4.51
|
|
|
Outstanding at April 30, 2018
|
15,455,842
|
|
|
5.01
|
|
|
Exercisable at April 30, 2018
|
4,740,226
|
|
|
1.97
|
|
|
Number of Shares Underlying Outstanding RSUs
|
|
Weighted-Average Grant-Date Fair Value per RSU
|
|||
Outstanding at January 31, 2018
|
130,000
|
|
|
$
|
9.45
|
|
Granted
|
70,000
|
|
|
15.00
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Forfeited or canceled
|
—
|
|
|
—
|
|
|
Outstanding at April 30, 2018
|
200,000
|
|
|
11.39
|
|
|
Operating
Leases
|
|
Capital
Leases
|
|
Total
|
||||||
Remainder of 2019
|
$
|
4,781
|
|
|
$
|
2,303
|
|
|
$
|
7,084
|
|
2020
|
8,658
|
|
|
3,103
|
|
|
11,761
|
|
|||
2021
|
9,265
|
|
|
817
|
|
|
10,082
|
|
|||
2022
|
9,500
|
|
|
—
|
|
|
9,500
|
|
|||
2023
|
9,745
|
|
|
—
|
|
|
9,745
|
|
|||
Thereafter
|
22,926
|
|
|
—
|
|
|
22,926
|
|
|||
Total minimum lease payments
|
$
|
64,875
|
|
|
$
|
6,223
|
|
|
$
|
71,098
|
|
Less: amount representing maintenance and support costs
|
|
|
$
|
(153
|
)
|
|
|
||||
Net minimum lease payments
|
|
|
6,070
|
|
|
|
|||||
Less: amount representing interest
|
|
|
(283
|
)
|
|
|
|||||
Present value of minimum lease payments
|
|
|
$
|
5,787
|
|
|
|
|
Three Months Ended April 30,
|
||||||
2018
|
|
2017
|
|||||
|
|
|
|
||||
United States
|
$
|
27,139
|
|
|
$
|
15,964
|
|
EMEA
|
4,483
|
|
|
3,089
|
|
||
Asia Pacific
|
2,818
|
|
|
1,912
|
|
||
Americas other than the United States
|
1,879
|
|
|
1,271
|
|
||
Total
|
$
|
36,319
|
|
|
$
|
22,236
|
|
|
Historical as of April 30, 2018
|
|
Pro Forma Adjustments
|
|
Pro Forma as of April 30, 2018
|
||||||
|
(in thousands)
|
||||||||||
Assets
|
|
|
|
|
|
||||||
Total current assets
|
$
|
72,967
|
|
|
$
|
162,961
|
|
|
$
|
235,928
|
|
Total long-term assets
|
42,068
|
|
|
(3,206
|
)
|
|
38,862
|
|
|||
Total assets
|
115,035
|
|
|
159,755
|
|
|
274,790
|
|
|||
Liabilities, convertible preferred stock and shareholders’ equity (deficit)
|
|
|
|
|
|
||||||
Total liabilities
|
93,895
|
|
|
(3,481
|
)
|
|
90,414
|
|
|||
Convertible preferred stock
|
112,687
|
|
|
(112,687
|
)
|
|
—
|
|
|||
Additional paid-in capital
|
29,414
|
|
|
275,923
|
|
|
305,337
|
|
|||
Accumulated deficit
|
(120,961
|
)
|
|
—
|
|
|
(120,961
|
)
|
|||
Total shareholders’ equity (deficit)
|
(91,547
|
)
|
|
275,923
|
|
|
184,376
|
|
|||
Total liabilities, convertible preferred stock and shareholders’ equity (deficit)
|
$
|
115,035
|
|
|
$
|
159,755
|
|
|
$
|
274,790
|
|
|
As of April 30,
|
||||||
2018
|
|
2017
|
|||||
Domain-based customers
|
75,642
|
|
|
69,039
|
|
||
Average annualized contract value per domain-based customer
|
$
|
1,808
|
|
|
$
|
1,230
|
|
Dollar-based net retention rate for all customers (trailing 12 months)
|
130
|
%
|
|
124
|
%
|
|
Three Months Ended April 30,
|
||||||
2018
|
|
2017
|
|||||
Revenue
|
(in thousands)
|
||||||
Subscription
|
$
|
32,057
|
|
|
$
|
20,375
|
|
Professional services
|
4,262
|
|
|
1,861
|
|
||
Total revenue
|
36,319
|
|
|
22,236
|
|
||
Cost of revenue
|
|
|
|
||||
Subscription
(1)
|
4,236
|
|
|
2,989
|
|
||
Professional services
(1)
|
3,087
|
|
|
1,508
|
|
||
Total cost of revenue
|
7,323
|
|
|
4,497
|
|
||
Gross profit
|
28,996
|
|
|
17,739
|
|
||
Operating expenses
|
|
|
|
||||
Research and development
(1)
|
12,844
|
|
|
6,508
|
|
||
Sales and marketing
(1)
|
22,384
|
|
|
14,749
|
|
||
General and administrative
(1)
|
6,798
|
|
|
3,679
|
|
||
Total operating expenses
|
42,026
|
|
|
24,936
|
|
||
Loss from operations
|
(13,030
|
)
|
|
(7,197
|
)
|
||
Interest expense and other, net
|
(1,300
|
)
|
|
13
|
|
||
Net loss
|
$
|
(14,330
|
)
|
|
$
|
(7,184
|
)
|
(1)
|
Amounts include share-based compensation expense as follows:
|
|
Three Months Ended April 30,
|
||||||
2018
|
|
2017
|
|||||
|
(in thousands)
|
||||||
Cost of subscription revenue
|
$
|
34
|
|
|
$
|
9
|
|
Cost of professional services revenue
|
47
|
|
|
12
|
|
||
Research and development
|
665
|
|
|
149
|
|
||
Sales and marketing
|
514
|
|
|
198
|
|
||
General and administrative
|
582
|
|
|
177
|
|
||
Total share-based compensation expense
|
$
|
1,842
|
|
|
$
|
545
|
|
|
Three Months Ended April 30,
|
|
Change
|
|||||||||||
2018
|
|
2017
|
|
Amount
|
|
%
|
||||||||
|
(dollars in thousands)
|
|||||||||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Subscription
|
$
|
32,057
|
|
|
$
|
20,375
|
|
|
$
|
11,682
|
|
|
57
|
%
|
Professional services
|
4,262
|
|
|
1,861
|
|
|
2,401
|
|
|
129
|
%
|
|||
Total revenue
|
$
|
36,319
|
|
|
$
|
22,236
|
|
|
$
|
14,083
|
|
|
63
|
%
|
Percentage of total revenue
|
|
|
|
|
|
|
|
|||||||
Subscription revenue
|
88
|
%
|
|
92
|
%
|
|
|
|
|
|||||
Professional services revenue
|
12
|
%
|
|
8
|
%
|
|
|
|
|
|
Three Months Ended April 30,
|
|
Change
|
|||||||||||
2018
|
|
2017
|
|
Amount
|
|
%
|
||||||||
|
(dollars in thousands)
|
|||||||||||||
Cost of revenue
|
|
|
|
|
|
|
|
|||||||
Subscription
|
$
|
4,236
|
|
|
$
|
2,989
|
|
|
$
|
1,247
|
|
|
42
|
%
|
Professional services
|
3,087
|
|
|
1,508
|
|
|
1,579
|
|
|
105
|
%
|
|||
Total cost of revenue
|
$
|
7,323
|
|
|
$
|
4,497
|
|
|
$
|
2,826
|
|
|
63
|
%
|
Gross profit
|
$
|
28,996
|
|
|
$
|
17,739
|
|
|
$
|
11,257
|
|
|
63
|
%
|
Gross margin
|
|
|
|
|
|
|
|
|||||||
Subscription
|
87
|
%
|
|
85
|
%
|
|
|
|
|
|||||
Professional services
|
28
|
%
|
|
19
|
%
|
|
|
|
|
|||||
Total gross margin
|
80
|
%
|
|
80
|
%
|
|
|
|
|
|
Three Months Ended April 30,
|
|
Change
|
|||||||||||
2018
|
|
2017
|
|
Amount
|
|
%
|
||||||||
|
(dollars in thousands)
|
|||||||||||||
Research and development
|
$
|
12,844
|
|
|
$
|
6,508
|
|
|
$
|
6,336
|
|
|
97
|
%
|
Percentage of total revenue
|
35
|
%
|
|
29
|
%
|
|
|
|
|
|
Three Months Ended April 30,
|
|
Change
|
|||||||||||
2018
|
|
2017
|
|
Amount
|
|
%
|
||||||||
|
(dollars in thousands)
|
|||||||||||||
Sales and marketing
|
$
|
22,384
|
|
|
$
|
14,749
|
|
|
$
|
7,635
|
|
|
52
|
%
|
Percentage of total revenue
|
62
|
%
|
|
66
|
%
|
|
|
|
|
|
Three Months Ended April 30,
|
|
Change
|
|||||||||||
2018
|
|
2017
|
|
Amount
|
|
%
|
||||||||
(dollars in thousands)
|
||||||||||||||
General and administrative
|
$
|
6,798
|
|
|
$
|
3,679
|
|
|
$
|
3,119
|
|
|
85
|
%
|
Percentage of total revenue
|
19
|
%
|
|
17
|
%
|
|
|
|
|
|
Three Months Ended April 30,
|
|
Change
|
|||||||||||
2018
|
|
2017
|
|
Amount
|
|
%
|
||||||||
(dollars in thousands)
|
||||||||||||||
Interest income (expense) and other, net
|
$
|
(1,300
|
)
|
|
$
|
13
|
|
|
$
|
(1,313
|
)
|
|
(10,100
|
)%
|
Percentage of total revenue
|
(4
|
)%
|
|
—
|
%
|
|
|
|
|
|
Three Months Ended April 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(dollars in thousands)
|
||||||
Gross profit
|
$
|
28,996
|
|
|
$
|
17,739
|
|
Add:
|
|
|
|
||||
Share-based compensation expense
|
81
|
|
|
21
|
|
||
Amortization of acquisition-related intangible assets
|
114
|
|
|
—
|
|
||
Non-GAAP gross profit
|
$
|
29,191
|
|
|
$
|
17,760
|
|
|
|
|
|
||||
Gross margin
|
80
|
%
|
|
80
|
%
|
||
Non-GAAP gross margin
|
80
|
%
|
|
80
|
%
|
|
Three Months Ended April 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(dollars in thousands)
|
||||||
Loss from operations
|
$
|
(13,030
|
)
|
|
$
|
(7,197
|
)
|
Add:
|
|
|
|
||||
Share-based compensation expense
|
1,842
|
|
|
545
|
|
||
Amortization of acquisition-related intangible assets
|
120
|
|
|
—
|
|
||
One-time costs of acquisition
|
47
|
|
|
—
|
|
||
Non-GAAP operating loss
|
$
|
(11,021
|
)
|
|
$
|
(6,652
|
)
|
|
|
|
|
||||
Operating margin
|
(36
|
)%
|
|
(32
|
)%
|
||
Non-GAAP operating margin
|
(30
|
)%
|
|
(30
|
)%
|
|
Three Months Ended April 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(dollars in thousands)
|
||||||
Net cash provided by (used in) operating activities
|
$
|
(8,154
|
)
|
|
$
|
(5,251
|
)
|
Less:
|
|
|
|
||||
Purchases of property and equipment
(1)
|
(810
|
)
|
|
(2,014
|
)
|
||
Payments on capital lease obligations
|
(759
|
)
|
|
(485
|
)
|
||
Free cash flow
|
$
|
(9,723
|
)
|
|
$
|
(7,750
|
)
|
(1)
|
Includes amounts related to capitalized internal-use software development costs.
|
|
Three Months Ended April 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(dollars in thousands)
|
||||||
Total revenue
|
$
|
36,319
|
|
|
$
|
22,236
|
|
Add:
|
|
|
|
||||
Deferred revenue (end of period)
|
66,341
|
|
|
40,812
|
|
||
Less:
|
|
|
|
||||
Deferred revenue (beginning of period)
|
57,281
|
|
|
32,712
|
|
||
Calculated billings
|
$
|
45,379
|
|
|
$
|
30,336
|
|
|
Three Months Ended April 30,
|
||||
|
2018
|
|
2017
|
||
|
(in thousands)
|
||||
GAAP weighted-average shares outstanding used in computing net loss per share attributable to common shareholders, basic and diluted
|
21,008
|
|
|
16,478
|
|
Add: common shares that would have resulted from conversion of convertible preferred stock at the beginning of the period, or when granted (if later), on a weighted average basis
|
68,480
|
|
|
62,145
|
|
Non-GAAP weighted-average shares outstanding used in computing net loss per share attributable to common shareholders, basic and diluted
|
89,488
|
|
|
78,623
|
|
|
Three Months Ended April 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(dollars in thousands)
|
||||||
Net loss
|
$
|
(14,330
|
)
|
|
$
|
(7,184
|
)
|
Add:
|
|
|
|
||||
Share-based compensation expense
|
1,842
|
|
|
545
|
|
||
Amortization of acquisition-related intangible assets
|
120
|
|
|
—
|
|
||
One-time costs of acquisition
|
47
|
|
|
—
|
|
||
Remeasurement of convertible preferred stock warrant liability
|
1,326
|
|
|
—
|
|
||
Non-GAAP net loss
|
$
|
(10,995
|
)
|
|
$
|
(6,639
|
)
|
|
Three Months Ended April 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Net cash provided by (used in) operating activities
|
$
|
(8,154
|
)
|
|
$
|
(5,251
|
)
|
Net cash provided by (used in) investing activities
|
(810
|
)
|
|
2,608
|
|
||
Net cash provided by (used in) financing activities
|
(92
|
)
|
|
30
|
|
||
Effects of foreign exchange on cash and cash equivalents
|
(25
|
)
|
|
—
|
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
(9,081
|
)
|
|
$
|
(2,613
|
)
|
•
|
our ability to attract new customers, including internationally;
|
•
|
the addition or loss of large customers, including through acquisitions or consolidations;
|
•
|
the mix of customers obtained through self-service on our website and sales-assisted channels;
|
•
|
customer renewal rates and the extent to which customers subscribe for additional users and products;
|
•
|
the timing and growth of our business, in particular through our hiring of new employees and international expansion;
|
•
|
our ability to hire, train, and maintain our sales force;
|
•
|
the length of the sales cycle;
|
•
|
the timing of recognition of revenue;
|
•
|
the amount and timing of operating expenses;
|
•
|
changes in our pricing policies or offerings or those of our competitors;
|
•
|
the timing and success of new product and service introductions by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation or new entrants among competitors, customers or strategic partners;
|
•
|
customers delaying purchasing decisions in anticipation of new products or product enhancements by us or our competitors or otherwise;
|
•
|
timing and effectiveness of new sales and marketing initiatives;
|
•
|
the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies;
|
•
|
network or service outages, Internet disruptions, security breaches or perceived security breaches, and the costs associated with responding to and addressing such failures or breaches;
|
•
|
changes in laws and regulations that affect our business, and any lawsuits or other proceedings involving us or our competitors;
|
•
|
changes in foreign currency exchange rates or adding additional currencies in which our sales are denominated; and
|
•
|
general economic, industry, and market conditions.
|
•
|
loss or delayed market acceptance and sales;
|
•
|
breach of contract or warranty claims;
|
•
|
issuance of sales credits or refunds for prepaid amounts related to unused subscription fees for our platform;
|
•
|
termination of subscription agreements and loss of customers;
|
•
|
diversion of development and customer service resources; and
|
•
|
harm to our reputation.
|
•
|
fluctuations in foreign currency exchange rates or adding additional currencies in which our sales are denominated;
|
•
|
new, or changes in, regulatory requirements;
|
•
|
tariffs, export and import restrictions, restrictions on foreign investments, sanctions, and other trade barriers or protection measures;
|
•
|
costs of localizing our platform and services;
|
•
|
lack of or delayed acceptance of localized versions of our platform and services;
|
•
|
difficulties in and costs of staffing, managing, and operating our international operations;
|
•
|
tax issues, including restrictions on repatriating earnings, and with respect to our corporate operating structure and intercompany arrangements;
|
•
|
weaker intellectual property protection;
|
•
|
the difficulty of, and burden and expense involved with, compliance with privacy, data protection, and information security laws, such as the General Data Protection Regulation, or the GDPR;
|
•
|
economic weakness or currency related crises;
|
•
|
the burden of complying with a wide variety of laws and regulations for foreign operations, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, or FCPA, the U.K. Bribery Act 2010, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell access to our platform in certain foreign markets, and the risks and costs of non-compliance;
|
•
|
generally longer payment cycles and greater difficulty in collecting accounts receivable;
|
•
|
our ability to adapt to sales practices and customer requirements in different cultures;
|
•
|
political instability and security risks in the countries where we are doing business; and
|
•
|
our ability to maintain our relationship with resellers to distribute our platform internationally.
|
•
|
diverting management time and focus from operating our business to acquisition integration;
|
•
|
disrupting our respective ongoing business operations;
|
•
|
customer and industry acceptance of the acquired company’s offerings;
|
•
|
our ability to implement or remediate the controls, procedures, and policies of the acquired company;
|
•
|
our ability to integrate acquired technologies in our own platform and technologies;
|
•
|
retaining and integrating acquired employees;
|
•
|
failing to maintain important business relationships and contracts;
|
•
|
failure to realize any anticipated synergies;
|
•
|
using cash that we may need in the future to operate our business or incurring debt on terms unfavorable to us or that we are unable to pay;
|
•
|
liability for activities of the acquired company before the acquisition;
|
•
|
litigation or other claims arising in connection with the acquired company;
|
•
|
impairment charges associated with goodwill and other acquired intangible assets; and
|
•
|
other unforeseen operating difficulties and expenditures.
|
•
|
price and volume fluctuations in the overall stock market or in the trading volume of our shares or the size of our public float;
|
•
|
negative publicity related to the real or perceived quality of our platform, as well as the failure to timely launch new features, integrations or services that gain market acceptance;
|
•
|
actual or anticipated fluctuations in our revenue or other operating metrics;
|
•
|
changes in the financial projections we provide to the public or our failure to meet these projections;
|
•
|
failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet the estimates or the expectations of investors;
|
•
|
recruitment or departure of key personnel;
|
•
|
price and volume fluctuations in the overall stock market or in the trading volume of our shares or the size of our public float;
|
•
|
changes in accounting standards, policies, guidelines, interpretations, or principals;
|
•
|
the economy as a whole and market conditions in our industry;
|
•
|
rumors and market speculation involving us or other companies in our industry;
|
•
|
failures or breaches of security or privacy, and the costs associated with responding to and addressing any such failures or breaches;
|
•
|
announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;
|
•
|
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
|
•
|
indemnity demands or lawsuits threatened or filed against us;
|
•
|
other events or factors, including those resulting from war, incidents of terrorism, or responses to these events;
|
•
|
the expiration of contractual lock-up or market stand-off agreements; and
|
•
|
sales of additional shares of our Class A common stock by us or our shareholders.
|
•
|
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes- Oxley Act;
|
•
|
not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board;
|
•
|
being permitted to present only two years of audited consolidated financial statements in addition to any required unaudited interim consolidated financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
|
•
|
reduced disclosure obligations regarding executive compensation; and
|
•
|
exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
|
•
|
established a classified board of directors so that not all members of our board are elected at one time;
|
•
|
permit only the board of directors to establish the number of directors and fill vacancies on the board;
|
•
|
eliminated the ability of our shareholders to call special meetings of shareholders;
|
•
|
prohibit shareholder action by written consent unless the consent is unanimous, which requires all shareholder actions to be taken at a meeting of our shareholders;
|
•
|
established advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by shareholders at annual shareholder meetings;
|
•
|
prohibit cumulative voting;
|
•
|
provide that directors may only be removed “for cause” and only with the approval of two-thirds of our shareholders;
|
•
|
require super-majority voting to amend some provisions in our amended and restated articles of incorporation and amended and restated bylaws; and
|
•
|
authorized the issuance of “blank check” preferred stock that our board could use to implement a shareholder rights plan, also known as a “poison pill.”
|
|
|
|
Incorporated by Reference
|
|
|||
Exhibit
Number
|
|
Exhibit Title
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Filed Herewith
|
3.1
|
|
|
|
|
|
X
|
|
3.2
|
|
|
|
|
|
X
|
|
4.1
|
|
S-1/A
|
333-223914
|
4.1
|
April 16, 2018
|
|
|
10.1
|
|
S-1/A
|
333-223914
|
10.1
|
April 16, 2018
|
|
|
10.2
|
|
S-1/A
|
333-223914
|
10.3
|
April 16, 2018
|
|
|
10.3
|
|
S-1/A
|
333-223914
|
10.4
|
April 16, 2018
|
|
|
10.4
|
|
S-1/A
|
333-223914
|
10.5
|
April 16, 2018
|
|
|
10.5
|
|
S-1
|
333-223914
|
10.12
|
March 26, 2018
|
|
|
10.6
|
|
S-1
|
333-223914
|
10.13
|
March 26, 2018
|
|
|
31.1
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
X
|
|
32.1*
|
|
|
|
|
|
X
|
|
32.2*
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
X
|
|
*
|
This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
|
|
|
|
SMARTSHEET INC.
|
|
|
|
|
|
|
By:
|
/s/ Mark P. Mader
|
|
|
Name:
|
Mark P. Mader
|
|
|
Title:
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date:
|
June 12, 2018
|
|
|
|
|
|
SMARTSHEET INC.
|
|
|
|
|
|
|
By:
|
/s/ Jennifer E. Ceran
|
|
|
Name:
|
Jennifer E. Ceran
|
|
|
Title:
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
Date:
|
June 12, 2018
|
|
|
|
|
|
|
By:
|
/s/ Mark Mader
|
|
|
Mark Mader
|
Date: April 30, 2018
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
SMARTSHEET INC.
|
|
By:
|
/s/ Mark Mader
|
|
|
Mark Mader
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
Date: April 30, 2018
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Smartsheet Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(c)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
By:
|
/s/ Mark Mader
|
|
|
Mark Mader
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
Date: June 12, 2018
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Smartsheet Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(c)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
By:
|
/s/ Jennifer Ceran
|
|
|
Jennifer Ceran
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
Date: June 12, 2018
|
|
|
|
Page
|
Article I - SHAREHOLDERS
|
1
|
Section 1.1: Annual Meetings
|
1
|
Section 1.2: Special Meetings
|
1
|
Section 1.3: Notice of Meetings
|
1
|
Section 1.4: Adjournments
|
1
|
Section 1.5: Quorum
|
2
|
Section 1.6: Organization
|
2
|
Section 1.7: Voting; Proxies
|
2
|
Section 1.8: Fixing Date for Determination of Shareholders of Record
|
3
|
Section 1.9: List of Shareholders Entitled to Vote
|
3
|
Section 1.10: Inspectors of Elections
|
4
|
Section 1.11: Notice of Shareholder Business; Nominations
|
5
|
Article II - BOARD OF DIRECTORS
|
8
|
Section 2.1: Number; Qualifications
|
8
|
Section 2.2: Election; Resignation; Removal; Vacancies
|
9
|
Section 2.3: Regular Meetings
|
9
|
Section 2.4: Special Meetings
|
9
|
Section 2.5: Remote Meetings Permitted
|
9
|
Section 2.6: Quorum; Vote Required for Action
|
9
|
Section 2.7: Organization
|
10
|
Section 2.8: Unanimous Action by Directors in Lieu of a Meeting
|
10
|
Section 2.9: Powers
|
10
|
Section 2.10: Compensation of Directors
|
10
|
Article III - COMMITTEES
|
10
|
Section 3.1: Committees
|
10
|
Section 3.2: Committee Rules
|
10
|
Article IV - OFFICERS
|
11
|
Section 4.1: Generally
|
11
|
Section 4.2: Chief Executive Officer
|
11
|
Section 4.3: Chairperson of the Board
|
12
|
Section 4.4: Lead Independent Director
|
12
|
Section 4.5: President
|
12
|
Section 4.6: Chief Financial Officer
|
12
|
Section 4.7: Treasurer
|
12
|
Section 4.8: Vice President
|
13
|
Section 4.9: Secretary
|
13
|
Section 4.10: Delegation of Authority
|
13
|
Section 4.11: Removal
|
13
|
Article V - STOCK
|
13
|
Section 5.l: Certificates; Uncertificated Shares
|
13
|
Section 5.2: Lost, Stolen or Destroyed Stock Certificates; Issuance
of New Certificates or Uncertificated Shares |
13
|
Section 5.3: Other Regulations
|
14
|
Article VI - INDEMNIFICATION
|
14
|
Section 6.1: Indemnification of Officers and Directors
|
14
|
Section 6.2: Advance of Expenses
|
14
|
Section 6.3: Non-Exclusivity of Rights
|
14
|
Section 6.4: Indemnification Contracts
|
15
|
Section 6.5: Right of Indemnitee to Bring Suit
|
15
|
Section 6.6: Nature of Rights
|
15
|
Section 6.7: Insurance
|
16
|
Article VII - NOTICES
|
16
|
Section 7.l: Notice
|
16
|
Section 7.3: Effectiveness of Notice
|
17
|
Section 7.2: Waiver of Notice
|
17
|
Article VIII - INTERESTED DIRECTORS
|
17
|
Section 8.1: Interested Directors
|
17
|
Section 8.2: Quorum
|
17
|
Article IX – MISCELLANEOUS
|
17
|
Section 9.1: Fiscal Year
|
17
|
Section 9.2: Seal
|
17
|
Section 9.3: Form of Records
|
18
|
Section 9.4: Reliance Upon Books and Records
|
18
|
Section 9.5: Articles of incorporation Governs
|
18
|
Section 9.6: Severability
|
18
|
Article X - AMENDMENT
|
18
|
|
|
|
|
By:
|
/s/ Paul Porrini
|
|
|
Paul Porrini
|
|
|
General Counsel and Secretary
|
|
|
|
|
|
|
Date: May 1, 2018
|
|
|
|
|
|
|
By:
|
/s/ Mark Mader
|
|
|
Mark Mader
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
Date: June 12, 2018
|
|
|
|
|
|
|
By:
|
/s/ Jennifer Ceran
|
|
|
Jennifer Ceran
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
Date: June 12, 2018
|
|
|