Specifically, last night SMAR posted a loss per share of ($0.12), beating consensus by $0.06, with revenue surging by 64% year/year to $36.3 mln, also ahead of the $33.2 mln expectation. On top of that, SMAR issued upside guidance for FY19, forecasting a loss per share of ($0.59)-($0.56) versus the ($0.61) consensus, on revenue of $159-$162 mln versus the $155.0 mln consensus.
But before taking a closer look at its earnings report, here is more background on what the company does:
SMAR is a provider of cloud-based software that enables companies to plan, capture, manage, automate and report on work at scale. Since being founded in 2005, Smartsheet has pursued its original vision to build a universal application for work management that does not require coding capabilities. The Smartsheet platform serves as a single, accessible source of truth across work processes and fosters accountability and engagement within teams, improving decision-making efficiency. Its platform provides a robust set of capabilities that help to limit obstacles to capturing information, including an intuitive spreadsheet interface as well as easily customizable forms. Within minutes, business users can, with little or no training, configure and modify its platform to customize workflows to suit their needs.
The platform is purpose-built to improve work execution. Smartsheet offers multiple ways for customers to plan and manage their work using projects, grids, cards, and calendars, and users can easily toggle between diverse views to support their team's preferred method of working. Team members can easily develop granular rule sets to ensure that actions, such as deadline notifications, status updates, and approval requests, are impactful and timely during collaborative projects.
Rewinding back to Smartsheet’s Q1 earnings, several factors contributed to driving the company’s strong performance. First, SMAR added 1,500 net new customers, bringing their base to a total of 75,642 customers. In particular, demand was driven by Smartsheet's consulting and training services.
Additionally, its existing customers spent more on new services, which is reflected in a few key metrics: the average ACV (annual contract value) jumped by 47% year/year to $1,808; the total number of customers with an ACV above $5,000 increased by 78% to 4,349; and its dollar-based retention rate was impressive at 130%. Each of these metrics illustrates that demand is very healthy for Smartsheet products.
SMAR's gross margin is also solid at 79.9%, up about 20 basis points from the year ago period. On the cost side, total operating expenses surged by 68%, outpacing top-line growth, to come in at $42.0 mln. Within its operating expenses is Sales & Marketing expense, which was up 52% to $22.4 mln, accounting for nearly 62% of revenue. The main blemish here is that SMAR is having to spend heavily in order to drive top-line growth. But this concern is somewhat mitigated by the fact that existing customers are ramping up their spending on new products, demonstrating that customers are finding value in SMAR's products.
Overall, SMAR's first quarterly report as a public company was a very solid one, and with the stock looking to make new post-IPO highs once again today, the name is grabbing the attention of more and more traders.