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Smartsheet (SMAR) Q4 Earnings and Revenues Top Estimates

Smartsheet Inc. SMAR reported fourth-quarter fiscal 2021 non-GAAP loss of 4 cents per share, narrower than the Zacks Consensus Estimate of a loss of 14 cents as well as the year-ago quarter’s loss of 13 cents. The bottom line also bettered management’s anticipated non-GAAP net loss between 13 cents and 15 cents per share.

Revenues surged 40% year over year to $109.9 million and also surpassed the Zacks Consensus Estimate by 7.2%. The top line also improved from management’s revenue projection between $102 million and $103 million.

The top line improvement was driven by a strong momentum for Smartsheet’s offerings, courtesy of higher demand for robust data collection and risk assessment capabilities amid the ongoing coronavirus pandemic.

Smartsheet Inc. Price, Consensus and EPS Surprise

Smartsheet Inc. price-consensus-eps-surprise-chart | Smartsheet Inc. Quote

Brandfolder contributed approximately $4 million to revenues in the fiscal fourth quarter. In the fiscal third quarter, Smartsheet concluded the buyout of Brandfolder for $152.5 million.

Smartsheet’s Subscription revenues (92% of total revenues) increased 42% year over year to $101.1 million. Moreover, Professional services (8% of total revenues) revenues rose 18% year over year to $8.8 million.

User Base Increased Y/Y

In the quarter under review, customers with annualized contract value (ACV) of $5,000 or higher increased 31% year over year to 11,874. Additionally, customers with ACV of $50,000 or higher surged 58% year over year to 1,515. Moreover, customers with ACV of $100,000 or higher soared 68% year over year to 588.

Notably, 138 companies increased their annual recurring revenues (ARR) by more than $50,000. Of these, 43 companies increased ARR by more than $100,000.

Smartsheet’s net dollar retention rate was 123% in the reported quarter. Moreover, the company’s average ACV per domain-based customer increased 40% year over year to $5,103.

Calculated billings in the reported quarter jumped 49% year over year to $151.2 million. In the fiscal fourth quarter, Brandfolder contributed $5.9 million to calculated billings. Management had anticipated calculated billings to grow 29-32% year over year to $131-$134 million.

Better-than-expected billings performance was driven by a consistent improvement in purchases from customers across mid-market and enterprise verticals, and a rise in the number of big deal wins during the reported quarter. Quarterly, semi-annual and multi-year billings represented about 5% of total billings reported in the quarter.

Operating Details

Non-GAAP gross margin contracted 100 basis points (bps) on a year-over-year basis to 81%.

Subscription gross margin was 85%, which contracted 300 bps year over year. Professional services margin was 28%, which expanded 300 bps year over year.

Total operating expenses increased 23.2% year over year to $114.6 million, driven primarily by higher research & development (R&D), general & administrative (G&A) expenses and sales & marketing (S&M) expenses.

Non-GAAP operating loss was almost $5.3 million, narrower than the year-ago quarter’s loss of $17.3 million. Management had anticipated non-GAAP operating loss between $16 million and $18 million.

Balance Sheet & Cash Flow

Smartsheet had cash & cash equivalents of $442.2 million as of Jan 31, 2021 compared with $420.4 million as of Oct 31, 2020.

Net cash provided by operating activities was $15.2 million during the quarter compared with $5.2 million net cash used in the previous quarter. Net free cash flow was $9.9 million compared with net free cash outflow $8.8 million in the previous quarter.

Fiscal 2021 Numbers

Smartsheet reported revenues of $385.5 million for fiscal 2021, up 42% from  fiscal 2020.

Non-GAAP loss per share was 33 cents against loss of 49 cents reported in fiscal 2020.

For the full fiscal, net cash used in operations came in at $15.6 million compared with $10.9 million in the previous fiscal year. Net free cash outflow totaled $31.6 million compared with net free cash outflow of $26.9 million in the prior fiscal year.

Guidance

Smartsheet expects revenues between $111 million and $112 million for first-quarter fiscal 2022. This indicates growth of 30-31% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for revenues is currently pegged at $108.59 million.

Calculated billings for the fiscal first quarter are expected between $118 million and $119 million.

Non-GAAP operating loss is expected between $17 million and $19 million while non-GAAP net loss is anticipated to be 14-15 cents per share. The Zacks Consensus Estimate for the bottom line is currently pegged at a loss of 13 cents.

For fiscal 2022, Smartsheet anticipates revenues between $500 million and $505 million, which indicates growth of 30-31% from the prior fiscal year. The Zacks Consensus Estimate for revenues is currently pegged at $486.87 million.

Calculated billings for the current fiscal year are expected between $580 million and $585 million.

The company now expects a non-GAAP operating loss of $45-$55 million.

Non-GAAP net loss per share is anticipated between 36 cents and 44 cents. The Zacks Consensus Estimate for the bottom line currently stands at a loss of 44 cents per share.

Zacks Rank and Stocks to Consider

Smartsheet currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are Vishay Intertechnology VSH, Skyworks SWKS and MaxLinear MXL, all sporting a Zacks Rank #1 (Strong Buy), presently. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Vishay, Skyworks and MaxLinear is currently pegged at 20.3%, 19%, and 20%, respectively.

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