What happened

Smartsheet (NYSE:SMAR) stock soared 80.7% in 2019, according to data from S&P Global Market Intelligence. The S&P 500 returned 31.5% over the period.

The cloud-based collaboration software provider's stock has gained 199% since its initial public offering (IPO) in April 2018.

An arrow pointing upward on a blue graph background

Image source: Getty Images.

So what

We can attribute Smartsheet stock's strong 2019 performance to an increasing number of investors discovering the stock and the company's robust revenue growth since its IPO.

In early December, Smartsheet reported its third-quarter results for fiscal 2020. Revenue jumped 53% year over year to $71.5 million. Subscription revenue was $64.4 million, an increase of 55%, and professional services revenue came in at $7.2 million, up 34%. 

The company's net loss widened to $28.9 million, or $0.25 per share, from a net loss of $15.6 million, or $0.15 per share, in the year-ago period. Adjusted net loss widened to $17.7 million, or $0.15 per share, from an adjusted net loss of $9.4 million, or $0.09 per share, in the third quarter of fiscal 2019. The adjusted bottom-line result beat Wall Street's consensus estimate of a loss of $0.18 per share. The widening loss is being driven by the company's investments in growth initiatives. 

In the earnings release, CEO Mark Mader said:

We delivered another strong quarter in Q3 and are well-positioned for the future. We are demonstrating the ability to extend and expand across the enterprise and, most importantly, customers are realizing value and are leaning in.

Indeed, the company's third-quarter dollar-based net retention rate of 134% reflects that customers are finding value in its products. This metric means existing customers spent an average of 34% more on the company's products in the quarter than they did in the year-ago period.

Now what

For the fourth quarter, Smartsheet guided for total revenue of $77.0 million to $78.0 million, representing growth of 48% to 50% year over year. It also expects an adjusted loss of $0.17 to $0.16 per share, a widening from the adjusted loss of $0.07 per share in the year-ago period. 

For the full 2020 fiscal year, the company anticipates total revenue of $269.4 million to $270.4 million, representing growth of about 52% year over year. It also expects an adjusted net loss of $0.53 to $0.52 per share, a widening from the adjusted loss of $0.36 per share in the fourth quarter of the prior fiscal year.