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Cloud Stocks: Smartsheet Looking up to Enterprise Customers for Growth

Posted on Thursday, Mar 19th 2020

Earlier this week, Seattle-based Smartsheet (Nasdaq: SMAR) announced its fourth quarter results that surpassed market expectations. Despite the recent turmoil in the stock market, the results helped the stock climb 1% in the after-hours trading session.

Smartsheet’s Financials

For the fourth quarter, Smartsheet’s revenues grew 51% to $78.5 million, ahead of the market’s forecast of $77.7 million. Adjusted net loss was $0.13 per share, better than the Street’s forecast of a loss of $0.16 per share. 

By segment, Subscription revenues grew 53% to $71.1 million, and Professional services revenue grew 31% to $7.5 million.

Among operating metrics, Smartsheet ended the year with 84,000 domain-based customers. It reported 6.3 million total users with 950,000 paid license users. The number of customers with annualized contract values (ACV) of $5,000 or more grew 47% to 9,079. The number of customers with ACV of $50,000 or more grew 116% to 961 and the number of customers with ACV of $100,000 or more grew 138% to 350. Average ACV per domain-based customer grew 48% to $3,643.

Smartsheet ended the year with revenues growing 52% to $270.9 million. Adjusted net loss for the year was $55 million compared with a loss of $36 million reported a year ago.

For the first quarter, Smartsheet expects revenues of $82-$83 million with non-GAAP net loss per share of $0.21-$0.19. It expects to end the year with revenues of $373-$378 million with a non-GAAP net loss per share of $0.62-$0.55. Analysts were looking for revenues of $81.6 million for the quarter with a loss of $0.15 per share and revenues of $372.4 million for the year with a loss of $0.53 per share. 

Smartsheet’s Enterprise Expansion

Smartsheet has been expanding its market presence through product innovation and improved user interface. Over the past few quarters, it has improved the look of its software platform to make it more intuitive by adding dashboards and visual aids such as charts and graphs. It has also been focusing on AI capabilities and has introduced automated workflows and work processes.

Smartsheet is building services that cater to the enterprise segment. For instance, it added a Control Center that enables organizations to implement workflow processes automatically at scale. Users can automate portfolio reporting into dashboards and analyze performance by connecting to third-party BI tools. Additional features such as Dynamic View allow large teams to control the types of information that can be shared with individual members.

Recently, it entered into a partnership with Acumatica, a leading cloud ERP company, to help organizations manage critical operations and workflows. Prior to the partnership, Smartsheet and Acumatica had integrated their platform. As part of the expanded relationship, the partners and customers of these two companies will get access to a unified solution that streamlines operations from project accounting to project management. Smartsheet will now be available in the Acumatica marketplace to enable Smartsheet’s reach into a new partner community.

Its stock is currently trading at $32.05 with a market capitalization of $4.3 billion. It hit a 52-week high of $55.79 in July last year and a 52-week low of $30.91 in September last year. Smartsheet had listed in 2018 at $15 a share at a valuation of $1.5 billion. Prior to that, it was privately held and had raised $113.2 million from investors including Jenny Ceran, Sutter Hill Ventures, Insight Venture Partners, and Madrona Venture Group. 

This segment is a part in the series : Cloud Stocks


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