Smartsheet (SMAR 32.00, +0.30, +0.95%) is trading roughly flat after being higher
initially after reporting Q2 (Jul) results last night. The company made its IPO
debut in late April 2018 and this is only its second earnings report since
going public. Smartsheet is a provider of cloud-based software which enables
companies to plan, capture, manage, automate, and report on work at scale.
Smartsheet sort of looks like an Excel spreadsheet but has a lot more
functionality in terms of task workflow among groups.
Smartsheet offers multiple ways for customers to plan and manage their work using projects, grids, cards, and calendars, and users can easily toggle between views to support their team's preferred way of working. Team members can easily develop granular rule sets to ensure actions, such as deadline notifications, status updates, and approval requests. Users can begin using Smartsheet within minutes and configure the platform for their needs with limited or no training.
Smartsheet is adaptable to manage virtually any type of work. Customers use Smartsheet for a variety of tasks, including software migration planning, vendor and contract management, brand launches, compliance reporting, event planning, customer onboarding, budget approvals, patent application processing, talent acquisition, benefit and retirement tracking, sales enablement, IR tracking, and website management, among others.
For example, Cisco uses Smartsheet to oversee a $300 mln annual spend on programs and technology, produce events, manage infrastructure projects and more. Starbucks uses Smartsheet to disseminate important updates across thousands of stores. MOD Pizza built a standardized system in Smartsheet to manage and organize the company's rapid growth, ensuring consistency and repeatability for 100 new store openings. Weyerhaeuser uses Smartsheet to provide account executives with real-time insights into the status of accounts. South Water Signs uses Smartsheet to schedule shifts of workers, process permit applications and approvals, prioritize new client requests etc.
Turning to the Q2 (Jul) results, Smartsheet reported a non-GAAP loss of $(0.08) per share, which was flat with last year and was well above prior guidance of $(0.14)-(0.13). Revenue rose 58.9% year/year to $42.4 mln, which also was above prior guidance of $38.5-39.5 mln. Subscription revenue is a key metric for SMAR and that came in at $37.5 mln, an increase of 57% year/year. In terms of guidance, SMAR expects a Q3 (Oct) non-GAAP loss of $(0.16)-(0.15) and revenue of $43.5-44.5 mln. Both of these are above market expectations.
In terms of operating metrics, SMAR ended the quarter with 76,693 domain-based customers. The number of all customers with annualized contract values (ACV) of $50,000 or more grew to 298, an increase of 146% year/year. Average ACV per domain-based customer increased to $2,002, a 49% growth year/year.
In sum, this was a good quarter for Smartsheet. The results came in ahead of prior guidance and the outlook for OctQ looks good as well. Profits are still a while off as SMAR has been spending a lot of money to develop its platform and acquire new customers. SMAR's focus right now is not profits, rather it wants to achieve scale and grow the top-line.
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