Shares of project management software maker Smartsheet (NYSE:SMAR) jumped 6.07% in the morning session after the company reported impressive "beat and raise" second quarter results. Key topline metrics, including revenue and billings, came in ahead of Wall Street's expectations. Similarly, operating income, EPS, and free cash flow also beat expectations.
Looking ahead, guidance came in strong, with the company raising the revenue and non-GAAP operating income projections for the full year, and both metrics exceeding Consensus estimates. During the quarter, Smartsheet announced new generative AI features that will help businesses automate tasks and improve productivity. The company's collaborative work management platform also remained highly rated by technology advisory firms such as Gartner and IDC. Overall, it was a strong quarter for the company.
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What is the market telling us:
Smartsheet's shares are very volatile and over the last year have had 30 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was three months ago, when the stock dropped 18.2% on the news that the company reported first quarter results that beat analysts' revenue, subscription revenue, free cash flow, and earnings per share estimates.
On the other hand, there was a decline in net revenue retention rate, which missed expectations slightly. Customer growth also decelerated and missed. Similarly, revenue guidance for the next quarter was below Consensus, while the full-year guidance was roughly inline. Operating income guidance also came in roughly in line with Consensus. The company touched on its AI capabilities adding that "We're planning to expand the AI-based capabilities in our platform to help our customers unlock new, higher value work." Overall, it was a mixed quarter for the company, with the market likely more focused on the weak guidance.
Smartsheet is up 15.8% since the beginning of the year, but at $44.83 per share it is still trading 13.2% below its 52-week high of $51.66 from June 2023. Investors who bought $1,000 worth of Smartsheet's shares 5 years ago would now be looking at an investment worth $1,570.
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