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Why Smartsheet Stock Bucked the Market Trend and Was Gaining Ground Friday

By Danny Vena – Dec 3, 2021 at 2:33PM

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The leader in workflow management software delivered robust financial results.

What happened

Shares of Smartsheet (SMAR 3.40%) surged out of the gate Friday, jumping as much as 16.5%, before being weighed down by the falling market. As of 1:13 p.m. ET, the stock was still up 6.4%.

The catalyst that sent the workflow management software provider higher was a financial report that exceeded already bullish expectations.

So what

For its fiscal 2022 third quarter (ended Oct. 31), Smartsheet delivered revenue of $144.6 million, up 46% year over year, driven by subscription revenue of $132.6 million, also up 46%. At the same time, professional services revenue jumped to $12 million, up 50%. This resulted in a non-GAAP loss per share of $0.03, which narrowed from a loss per share of $0.12 in the prior-year quarter.  

Colleagues in a steel and glass-walled office having a discussion while looking at a tablet.

Image source: Getty Images.

To put those numbers in context, analysts' consensus estimates were calling for revenue of $139.9 million and a loss per share of $0.11. 

The company's calculated billings, which includes contractually obligated revenue that has yet to be included in revenue, grew to $161.6 million, up 44%. After being adjusted for its recent acquisition of Brandfolder, billings climbed 50% year over year, accelerating from 47% growth in the second quarter. 

Customer metrics were also robust. Customers with an annual contract value (ACV) above $5,000 were up 27%, while those paying $50,000 or more grew 56%. Even better, customers with an ACV of $100,000 a year or more expanded 72%. Smartsheet's dollar-based net retention rate was 131%, illustrating that existing customers are spending more. 

"This was a record quarter for Smartsheet on multiple financial and operational levels, including closing the highest number of large deals in a quarter and seeing the best bookings performance in our company's history," noted CEO Mark Mader.

Now what

Equally as important for investors was Smartsheet's bullish outlook. Management is guiding for revenue in a range of $151 million to $152 million, above analysts' consensus estimates of $150.1 million, and representing growth of roughly 38%. The company also expects billings of about $205 million, or growth of about 36%. 

The broad-based strength displayed in Smartsheet's results suggests the company is just getting started.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Smartsheet. The Motley Fool has a disclosure policy.

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