As Smartsheet (SMAR) readies its quarterly earnings unveiling, its proactive steps in expanding services and market presence, coupled with significant recent milestones, raise a pivotal query: Does this momentum signal a buy, hold, or sell for its shares? Read more to discover….
The enterprise work management platform Smartsheet Inc. (SMAR) is ready to disclose its fiscal 2024 fourth-quarter earnings on March 14. Analysts anticipate a 20.5% year-over-year revenue growth to $255.86 million. Moreover, the corporate’s EPS for a similar period is projected to surge 159% from the previous 12 months’s quarter to $0.18.
Furthermore, in its fiscal third quarter release, SMAR projected total revenue for the fourth quarter of fiscal 2024 at $254-$256 million, anticipating 20-21% year-over-year growth, with non-GAAP operating income of $21-$23 million and non-GAAP net income per share of $0.17-$0.19.
For the whole fiscal 12 months 2024, the corporate forecasted revenue at $955-$957 million, indicating a 25% year-over-year increase, with non-GAAP operating income projected at $82-$84 million and non-GAAP net income per share at $0.68-$0.69.
Mark Mader, CEO of SMAR, expressed, “We exceeded expectations on the highest and bottom lines this quarter. Our enterprise customers are operating more durable, more mission-critical solutions on the Smartsheet platform than ever before. We remain focused on bringing our latest innovations to the market so latest and existing customers can fully capitalize on our enterprise leading platform.”
Moreover, on January 17, 2024, SMAR announced achieving $1 billion in Annualized Recurring Revenue (ARR) within the fourth quarter, a major milestone following its recognition as a Leader within the December 2023 Gartner® Magic Quadrant™ for Collaborative Work Management.
Presently, SMAR empowers mission-critical operations securely and reliably at scale for various organizations globally, including roughly 85% of the 2023 Fortune 500 firms. Mark commented, “Crossing this financial threshold of $1 billion in ARR is meaningful, but at the identical time ought to be recognized as one other marker along the way in which.”
Shares of SMAR have gained 5.3% over the past 12 months, closing the last trading session at $41.85.
Listed here are the elemental facets of SMAR that would influence its price performance within the near term:
Latest Developments
On October 23, 2023, SMAR introduced its latest Smartsheet Region in Australia, reinforcing its commitment to enhancing service for its expanding Asia-Pacific-Japan (APJ) clientele. Smartsheet Regions, distributed globally, facilitate compliance with data residency regulations, granting organizations the pliability to select hosting and processing locations.
The Australian Smartsheet Region will serve each latest and existing APJ customers, operating across multiple sites to ensure redundancy. The configuration ensures enterprise-level availability and scalability, positioning SMAR for accelerated growth and expansion within the APJ market while enhancing its status for reliability and customer-centric solutions.
On September 19, 2023, SMAR introduced its next-generation Smartsheet platform, showcasing novel product capabilities that empower advanced solution development, AI-driven data insights, and extensive scalability. From establishing healthcare clinics to overseeing acquisitions or executing marketing campaigns with tens of hundreds of concurrent projects, SMAR aids customers in handling increasingly intricate and mission-critical tasks.
The revolutionary leap would enhance SMAR’s value proposition and fortify its competitive edge, attracting a broader clientele and fostering sustained growth and market expansion.
Solid Financials
Through the third quarter of fiscal 2024, which ended October 31, 2023, SMAR’s total revenue increased 23.2% year-over-year to $245.92 million. Its non-GAAP operating income got here in at $19.36 million, compared to an operating lack of $4.31 million within the previous 12 months’s quarter.
Moreover, the corporate’s non-GAAP net income and non-GAAP net income per share stood at $22.59 million and $0.16, compared to a net loss and loss per share of $1.89 million and $0.01, respectively, within the prior 12 months’s period.
Sound Historical Growth
Over the past three years, SMAR’s revenue increased at a CAGR of 37.2%. Its tangible book value grew at a 3.7% CAGR in the course of the period. Furthermore, the corporate’s total assets and levered free money flow rose at CAGRs of 13.1% and 96.4%, respectively, over the identical time-frame.
Optimistic Analyst Estimates
The consensus revenue estimate of $1.14 billion for the fiscal 12 months ending January 2025 reflects a 19.4% year-over-year increase. Likewise, the corporate’s EPS for a similar period is predicted to grow 35.8% from the previous 12 months to $0.93. Furthermore, the corporate topped the consensus revenue estimates in all 4 trailing quarters.
Robust Profitability
The stock’s trailing-12-month gross profit margin and trailing-12-month levered FCF margin of 79.79% and 26.69% are 62.6% and 197.8% higher than the industry averages of 49.08% and eight.96%, respectively. Furthermore, the corporate’s trailing-12-month asset turnover ratio of 0.82x is 34.9% higher than the 0.61x industry average.
POWR Rankings Exhibit Sound Prospects
SMAR’s positive outlook is reflected in its POWR Rankings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Rankings are calculated by bearing in mind 118 various factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. SMAR holds a B grade for Growth, reflecting its strong historical growth performance. Moreover, the stock earns a B grade for Quality, which is consistent with its impressive profitability metrics.
SMAR is ranked #9 out of 19 inside the B-rated Software – SAAS industry. Click here to access SMAR’s Value, Momentum, Stability, and Sentiment rankings.
Bottom Line
SMAR is poised for growth driven by its revolutionary product capabilities and expansion strategies. The introduction of its Smartsheet Region in Australia and the disclosing of its next-generation platform display its commitment to enhancing services and catering to a broader clientele, positioning the corporate for accelerated market expansion.
Moreover, SMAR could make a perfect buy immediately owing to its solid financial performance in probably the most recent quarter, optimistic analyst estimates, and robust profitability metrics. Moreover, with strong historical growth, SMAR stands out within the software industry, offering the potential for long-term value appreciation.
How Does Smartsheet Inc. (SMAR) Stack Up Against Its Peers?
While SMAR has an overall grade of B, equating to a Buy rating, you might take a look at these A (Strong Buy) rated stocks inside the Software – SAAS industry: DocuSign, Inc. (DOCU), Informatica Inc. (INFA) and Vimeo, Inc. (VMEO). To explore more Software – SAAS stocks, click here.
What To Do Next?
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SMAR shares were unchanged in premarket trading Tuesday. 12 months-to-date, SMAR has declined -12.48%, versus a 7.57% rise within the benchmark S&P 500 index in the course of the same period.
In regards to the Creator: Aanchal Sugandh
Aanchal’s passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor’s degree in finance and is pursuing the CFA program.
She is proficient at assessing the long-term prospects of stocks together with her fundamental evaluation skills. Her goal is to help investors construct portfolios with sustainable returns.
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