Shares of Smartsheet Inc. (SMAR) have surged 22% over the past month. SMAR provides cloud-based platforms for work management. Recently, the company delivered a robust third-quarter performance buoyed by increased subscription and professional services revenue.
Additionally, Smartsheet closed several deals and bookings during this period. With these developments in mind, let us take a look at the changes in the company’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Smartsheet’s top two risk categories are Finance & Corporate and Tech & Innovation, contributing 35% and 19% to the total 54 risks identified, respectively.
Compared to a sector average Tech & Innovation risk factor of 16%, Smartsheet’s is at 19%. In its recent quarterly report, the company has changed five key risk factors.
Smartsheet highlighted that it had previously identified material weaknesses in its internal controls over financial reporting. Although the company has now remediated these weaknesses, there can be no assurance if its remediated controls will continue to function properly in the future.
The company also noted that its platform and internal IT systems have been subject to cyber threats in the past, and could be threatened in the future as well. Any actual or perceived vulnerabilities or unauthorized access to Smartsheet’s corporate assets may lead to data loss, lower revenues, and significant costs for the company.
Smartsheet noted that any failure to comply with Federal Acquisition Regulation clauses or anti-corruption and anti-money laundering laws related to its activities outside the U.S. could subject the company to penalties and other adverse consequences. Responding to any enforcement action could divert its management’s attention and resources, and higher costs.
Smartsheet also conceded that its growth depends on its ability to expand its sales force domestically and internationally. If Smartsheet is not able to hire and train effective sales personnel, or if its sales force fails to achieve the desired results, then the company’s business could suffer.
The company also noted that it may face difficulties in accurately predicting the optimal pricing required to attract new customers and retain existing ones.
Hedge Fund Activity
According to TipRanks data, Wall Street’s best hedge funds have increased holdings in Smartsheet by 2.7 thousand shares in the last quarter, indicating a neutral hedge fund confidence in the stock based on the activities of 7 hedge funds, in the recent quarter.
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