Smartsheet Inc. (NYSE: SMAR) has reported a narrow-than-expected loss for the fourth quarter of Fiscal 2022 (ended January 31, 2022). Its bottom line was 20% better than the consensus estimate. Also, the company’s revenues were 3.8% above the top-line consensus estimate.
Despite the bottom line faring well against expectations, it seems that disappointing year-over-year comparisons and projections for the first quarter and the Fiscal Year 2023 (ending January 2023) spoiled investors’ sentiments. In the extended trading session on Tuesday, shares of Smartsheet lost 3.2% to close at $42.11.
Smartsheet’s cloud-based platform makes it easier for organizations to execute their work effectively. Its offerings are widely used in finance, automotive, aerospace, healthcare, government, technology, marketing, and other such work-demanding industries. The company is headquartered in Bellevue, WA.
Quarterly Highlights
In the quarter, Smartsheet’s loss per share (non-GAAP) stood at $0.12, lower than the consensus estimate of a loss of 15 cents per share. However, the quarterly loss of $0.12 per share was way higher than the year-ago loss of $0.04 per share.
Revenues were $157.4 million, compared with the consensus estimate of $151.7 million. On a year-over-year basis, revenues increased 43.2% on the back of 44.1% growth in subscription revenues and 33.9% expansion in professional services revenues.
Cost of revenues increased 35.6% year-over-year and gross profit was up 45.4% to $124.4 million. Total operating expenses grew 54.1% year-over-year to $176.5 million. Non-GAAP operating loss was $14.5 million in the quarter, wider than a loss of $5.3 million in the year-ago quarter. Similarly, operating margin (non-GAAP) was (9%) in the fourth quarter versus the year-ago figure of (5%).
Annual Highlights
In Fiscal 2022, Smartsheet’s non-GAAP loss was $0.28 per share, lower than the year-ago loss of $0.33 per share. Revenues in the year increased 42.9% year-over-year to $550.8 million.
The company’s net retention rate (dollar-based) was 134% at Fiscal 2022-end versus 123% at Fiscal 2021-end. Its average annualized contract values (ACV) grew 37% to $6,977 for every domain-based customer.
Exiting the fourth quarter, Smartsheet had cash and cash equivalents of $449.1 million, up 1.6% year-over-year. Meanwhile, the company’s operating lease liabilities (non-current) decreased 19% to $58.2 million.
In Fiscal 2022, Smartsheet’s net cash used in operating activities was $3.5 million, reflecting a 77.6% improvement over $15.6 million used in the previous year. Capital expenditure increased 152.69% year-over-year to $10.6 million. Free cash outflow was $20.8 million in Fiscal 2022.
Projections for Q1 and Fiscal 2023
For Fiscal 2023, Smartsheet anticipates revenues to grow 36%-37% year-over-year to $750-$755 million. Operating loss (non-GAAP) is predicted to be within the $80-$90 million range and loss per share (non-GAAP) to be within the $0.62-$0.70 range.
The yearly loss projection is worse than the company’s loss of $0.28 per share in Fiscal 2022.
Free cash outflow in the year is predicted to be $10-$15 million.
For the first quarter, revenues are predicted to be within the $162-$163 million range, mirroring an increase of 38%-39% from the previous year. Operating loss (non-GAAP) is expected to be $23-$25 million and loss per share (non-GAAP) to be within the $0.18-$0.20 range.
Management’s Take
Smartsheet’s President and CEO, Mark Mader, said, “We enter FY23 with a growing team that is focused on delivering the market-leading innovation that is increasingly vital for our customers. The global work management market is thriving, and customers are choosing Smartsheet in record numbers.”
Wall Street’s Take
Recently, Michael Turrin, an analyst at Wells Fargo, maintained a Buy rating on Smartsheet and lowered the price target to $70 (60.96% upside potential) from $95.
Wall Street is optimistic about Smartsheet’s growth prospects and has a Strong Buy consensus rating based on 9 Buys and 2 Holds. The average Smartsheet price target is $79.80, suggesting 83.49% upside potential from the closing price on Tuesday. Over the past year, shares of Smartsheet have lost 36.6%.
Bloggers Opinion
The TipRanks data reveals that the financial bloggers’ opinions are 100% Bullish on SMAR, compared to the sector average of 68%.
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