What Happened:
Shares of project management software maker Smartsheet (NYSE:SMAR) jumped 10.1% in the morning session after the company reported second-quarter earnings results, with revenue, billings, adjusted operating income, and EPS outperforming Wall Street's estimates. On the other hand, full-year revenue guidance slightly missed Wall Street's estimates. The company is likely experiencing challenges with smaller customer cohorts amid the challenging demand environment, with churn rate in the segment up slightly to 4.5%. Otherwise, we think this was a decent quarter featuring some areas of strength but also some blemishes, especially in the outlook.
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What is the market telling us:
Smartsheet’s shares are very volatile and over the last year have had 9 moves greater than 5%. But moves this big are very rare even for Smartsheet and that is indicating to us that this news had a significant impact on the market’s perception of the business.
The previous big move we wrote about was about 23 hours ago, when the company gained 5.4% on the news that Reuters reported that a group of investors, including private equity firm Vista Equity and Blackstone, are in talks to acquire the company (Smartsheet). According to the sources, a transaction could be signed in the coming weeks if the talks don't fall apart. Vista Equity had a 4.7% stake in Smartsheet as of the end of June 2024.
Smartsheet is up 13.4% since the beginning of the year, and at $52.82 per share, has set a new 52-week high. Investors who bought $1,000 worth of Smartsheet’s shares 5 years ago would now be looking at an investment worth $1,310.
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