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Smartsheet Posts Outstanding Q3 Results; Shares Up 16%

Smartsheet Inc. (SMAR) reported better-than-expected third-quarter results with solid growth across all key metrics. The company closed the highest number of large deals in Q3, and also saw the best bookings performance in its history.

Following the news, shares soared 16.1% during the extended trading session on December 2. Smartsheet designs and develops cloud-based platforms for work management. Its shares have gained 1.2% over the past year.

Better-Than-Expected Results

Smartsheet posted a quarterly loss of 3 cents per share, much lower than analysts’ estimated loss of 10 cents per share, and the quarterly loss of 12 cents per share in the prior-year quarter.

Moreover, total revenue jumped 46% year-over-year to $144.62 million, significantly outpacing the analysts’ estimates of $138.6 million.

Compared to Q3FY21, Smartsheet’s subscription revenue grew 46% and professional services revenue grew 50%.

Additionally, Q3 billings increased 44% year-over-year to $161.6 million, and the quarter-end dollar-based net retention rate was 131%.

Management Comments

President and CEO of Smartsheet, Mark Mader, said, “Our platform can scale from a simple project management tool used by a five-person firm to an enterprise SaaS platform that enables work across critical business systems at the largest companies in the world. Our business model and teams are primed to seize the enormous opportunity ahead of us to help global customers of all sizes transform how they work.”

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Based on the continued business momentum, the company forecasts fourth-quarter revenue to be in the range of $151 million to $152 million, exceeding consensus estimates of $144.74 million.

Furthermore, Q4 loss is projected to be between $0.16 per share and $0.14 per share, against the consensus estimated loss of $0.15 per share.

For the full year fiscal 2022, Smartsheet expects revenue to fall in the range of $544 million to $545 million, and loss to fall in the range of $0.32 per share to $0.30 per share.

Analysts’ View

The Wall Street community has a Strong Buy consensus rating on the stock based on 10 Buys and 3 Holds. The average Smartsheet price target of $89.92 implies 47% upside potential to current levels.

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