Smartsheet's (NYSE:SMAR) Q2 Sales Top Estimates

Radek Strnad /
2023/09/07 4:14 pm EDT

Project management software maker Smartsheet (NYSE:SMAR) reported Q2 FY2024 results topping analysts' expectations, with revenue up 26.2% year on year to $235.6 million. The company also expects next quarter's revenue to be around $241 million, slightly below analysts' estimates. Turning to EPS, Smartsheet made a GAAP loss of $0.25 per share, improving from its loss of $0.48 per share in the same quarter last year.

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Smartsheet (SMAR) Q2 FY2024 Highlights:

  • Revenue: $235.6 million vs analyst estimates of $229.5 million (2.63% beat)
  • EPS (non-GAAP): $0.16 vs analyst estimates of $0.07 ($0.09 beat)
  • Revenue Guidance for Q3 2024 is $241 million at the midpoint, roughly in line with what analysts were expecting
  • The company reconfirmed its revenue guidance for the full year of $951.5 million at the midpoint
  • Free Cash Flow of $45.5 million, up 45.3% from the previous quarter
  • Net Revenue Retention Rate: 121%, in line with the previous quarter
  • Customers: 19,031 customers paying more than $5,000 annually
  • Gross Margin (GAAP): 80%, up from 78.3% in the same quarter last year

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

Sales Growth

As you can see below, Smartsheet's revenue growth has been very strong over the last two years, growing from $131.7 million in Q2 FY2022 to $235.6 million this quarter.

Smartsheet Total Revenue

This quarter, Smartsheet's quarterly revenue was once again up a very solid 26.2% year on year. On top of that, its revenue increased $15.7 million quarter on quarter, a very strong improvement from the $7.55 million increase in Q1 2024. This is a sign of acceleration of growth and great to see.

Next quarter's guidance suggests that Smartsheet is expecting revenue to grow 20.8% year on year to $241 million, slowing down from the 38% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 19.7% over the next 12 months before the earnings results announcement.

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Large Customers Growth

This quarter, Smartsheet reported 19,031 enterprise customers paying more than $5,000 annually, an increase of 548 from the previous quarter. That's quite a bit more contract wins than last quarter but also quite a bit below what we've typically observed over the last year, suggesting that the company may be reinvigorating growth.

Smartsheet customers paying more than $5,000 annually

Key Takeaways from Smartsheet's Q2 Results

Sporting a market capitalization of $5.44 billion, Smartsheet is among smaller companies, but its more than $549 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.

It was good to see Smartsheet beat analysts' revenue expectations this quarter and the new large contract wins. On the other hand, its net revenue retention declined. Zooming out, we think this was still a decent quarter, showing that the company is staying on track. The stock is up 3.22% after reporting and currently trades at $41.65 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.

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