Smartsheet (NYSE:SMAR) Exceeds Q1 Expectations, Stock Jumps 11.3%

Kayode Omotosho /
2024/06/05 4:19 pm EDT

Project management software maker Smartsheet (NYSE:SMAR) beat analysts' expectations in Q1 CY2024, with revenue up 19.6% year on year to $263 million. The company expects next quarter's revenue to be around $274 million, in line with analysts' estimates. It made a non-GAAP profit of $0.32 per share, improving from its profit of $0.18 per share in the same quarter last year.

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Smartsheet (SMAR) Q1 CY2024 Highlights:

  • Revenue: $263 million vs analyst estimates of $258.2 million (1.9% beat)
  • EPS (non-GAAP): $0.32 vs analyst estimates of $0.27 (20.6% beat)
  • Revenue Guidance for Q2 CY2024 is $274 million at the midpoint, roughly in line with what analysts were expecting (however, non-GAAP operating profit guidance was well ahead for the period)
  • The company reconfirmed its revenue guidance for the full year of $1.12 billion at the midpoint (however, non-GAAP operating profit guidance was raised and was well ahead for the period)
  • Gross Margin (GAAP): 81.6%, up from 79.1% in the same quarter last year
  • Free Cash Flow of $45.68 million, down 18.8% from the previous quarter
  • Net Revenue Retention Rate: 114%, down from 116% in the previous quarter
  • Customers: 19,977 customers paying more than $5,000 annually
  • Billings: $236.1 million at quarter end, up 9.5% year on year
  • Market Capitalization: $5.18 billion

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

Project Management Software

The future of work requires teams to collaborate across departments and remote offices. Project management software is both driving this change and benefiting from it. While the trend of collaborative work management has been strong for a while, the Covid pandemic has definitively accelerated the demand for tools that allow work to be done remotely.

Sales Growth

As you can see below, Smartsheet's revenue growth has been very strong over the last three years, growing from $117.1 million in Q1 2022 to $263 million this quarter.

Smartsheet Total Revenue

This quarter, Smartsheet's quarterly revenue was once again up 19.6% year on year. However, its growth did slow down compared to last quarter as the company's revenue increased by just $6.04 million in Q1 compared to $11.03 million in Q4 CY2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Next quarter's guidance suggests that Smartsheet is expecting revenue to grow 16.3% year on year to $274 million, slowing down from the 26.2% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 15.6% over the next 12 months before the earnings results announcement.

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Large Customers Growth

This quarter, Smartsheet reported 19,977 enterprise customers paying more than $5,000 annually, an increase of 159 from the previous quarter. That's a bit fewer contract wins than last quarter and quite a bit below what we've typically observed over the past four quarters, suggesting that its sales momentum with large customers is slowing.

Smartsheet customers paying more than $5,000 annually

Key Takeaways from Smartsheet's Q1 Results

It was encouraging to see Smartsheet narrowly top analysts' revenue expectations this quarter. The bright spot with regards to guidance was that while revenue guidance was in line with expectations, non-GAAP operating profit guidance was well ahead for next quarter and the full year. This shows that revenue growth is on track but that growth is much more profitable than anticipated. Overall, this was a solid quarter for Smartsheet. The stock is up 11.3% after reporting and currently trades at $42.01 per share.

So should you invest in Smartsheet right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.