Smartsheet (NYSE:NYSE:SMAR) Delivers Impressive Q2, Upgrades Full Year Guidance

Radek Strnad /
2021/09/07 4:13 pm EDT

Project management software maker Smartsheet (NYSE:SMAR) reported Q2 FY2022 results topping analyst expectations, with revenue up 44.4% year on year to $131.7 million. Smartsheet made a GAAP loss of $44.1 million, down on its loss of $26.5 million, in the same quarter last year.

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Smartsheet (NYSE:SMAR) Q2 FY2022 Highlights:

  • Revenue: $131.7 million vs analyst estimates of $125.4 million (4.99% beat)
  • EPS (GAAP): -$0.35
  • Revenue guidance for Q3 2022 is $138.5 million at the midpoint, above analyst estimates of $129.9 million
  • The company lifted revenue guidance for the full year, from $512.5 million to $531.5 million at the midpoint, a 3.7% increase
  • Free cash flow was negative $3.53 million, compared to negative free cash flow of -$8.2 million in previous quarter
  • Net Revenue Retention Rate: 128%, up from 125% previous quarter
  • Customers: 13,420 customers paying more than $5,000 annually
  • Gross Margin (GAAP): 79.1%, up from 77.3% previous quarter

Founded in 2005, Smartsheet (NYSE:SMAR) is a software as a service platform that helps companies plan, manage and report on work.

While the trend of collaborative work management has been strong for a while, the Covid pandemic has definitely accelerated the demand for tools that allow work to be done remotely.

“Our strong results this quarter reflect the continued rapid adoption of our platform in new deals and expansion within existing customers,” said Mark Mader, President and CEO of Smartsheet.

Sales Growth

As you can see below, Smartsheet's revenue growth has been very strong over the last year, growing from quarterly revenue of $91.2 million, to $131.7 million.

Smartsheet Total Revenue

And unsurprisingly, this was another great quarter for Smartsheet with revenue up an absolutely stunning 44.4% year on year. On top of that, revenue increased $14.6 million quarter on quarter, a very strong improvement on the $7.21 million increase in Q1 2022, and a sign of acceleration of growth.

Analysts covering the company are expecting the revenues to grow 27.3% over the next twelve months, although we would expect them to review their estimates once they get to read these results.

There are others doing even better than Smartsheet. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. You can find it on our platform for free.

Large Customers Growth

You can see below that at the end of the quarter Smartsheet reported 13,420 enterprise customers paying more than $5,000 annually, an increase of 765 on last quarter. That's in line with the number of contracts wins we are used to seeing over the last year, suggesting that the company is able to maintain its current sales momentum.

Smartsheet customers paying more than $5,000 annually

Key Takeaways from Smartsheet's Q2 Results

With a market capitalization of $10.4 billion, more than $442.8 million in cash and the fact it is operating close to free cash flow break-even the company is in a strong financial position to invest in growth.

We were impressed by the very optimistic revenue guidance Smartsheet provided for the next quarter. And we were also excited to see the really strong revenue growth. Zooming out, we think this was a good quarter that should have shareholders cheering. The company is down -1.21% on the results and currently trades at $81.88 per share.

Smartsheet may have had a good quarter, so should you invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.