According to a recent report, the global enterprise collaboration market is expected to grow 12% annually over the next few years to reach $101.7 billion by 2028. Smartsheet (Nasdaq: SMAR) recently announced its quarterly results that outpaced market expectations.
 

Smartsheet’s Financials

For the second quarter, Smartsheet’s revenues grew 42% to $186.7 million, ahead of the market’s forecast of $180.4 million. Net loss was $0.18 per share, ahead of the market’s estimated loss of $0.20 per share.

By segment, Subscription revenues grew 43% to $173.5 million, and Professional services revenue grew 24% to $13.2 million.

Among operating metrics, customers with annualized contract value (ACV) of $5,000 or higher increased by 24% to 16,682. Customers with ACV of $50,000 or higher grew 48% to 2,738 and customers with ACV of $100,000 or higher grew 63% to 1,220. Its net dollar retention rate was 131% and the average ACV per domain-based customer increased 28% to $7,557.

For the third quarter, Smartsheet expects revenues of $193-$194 million and non-GAAP net loss per share of $0.16-$0.15. The market was looking for revenues of $195.94 million and a loss of $0.15 per share. Smartsheet expects to end the year with revenues of $750-$755 million and a loss of $0.49-$0.56 per share. The market was looking for revenues of $758.11 million and a net loss of $0.63 per share for the year.
 

Smartsheet’s Outfit Acquisition

Earlier this month, Smartsheet announced the acquisition of brand management, templating, and creative automation platform Outfit for an undisclosed sum. Australia-based Outfit was set up in 2013 by Bruce Stronge who wanted to create a platform that could transform the way organizations created, collaborated on, and shared their branded marketing materials. Its solution drives brand consistency and reduces marketing production challenges by automating the production of digital and print marketing materials through flexible, constraints-based templates. Its customers include Subaru, Cloudera, Red Hat, and Durham University. Prior to the acquisition, Outfit had raised $21 million in funding from investors including Five Elms Capital and Equity Venture Partners.

Smartsheet plans to integrate Outfit’s capabilities into its Brandfolder offering to enable its customers to realize greater value from a powerful content automation capability. Digital assets are becoming more and more critical for organizations, resulting in a higher focus on the need for collaborative work management and digital asset management (DAM) platforms to work together. Smartsheet has been driving Brandfolder to become the leading creative automation solution available in the market. The acquisition will help extend Brandfolder’s content experience and provide its customers with access to content at scale, at speed, and every time. The acquisition is expected to be financially net-neutral for the current year.

Meanwhile, the recent stock market turbulence has hurt Smartsheet’s stock as well. Its stock is currently trading at $37.88 with a market capitalization of $4.93 billion. It climbed to a high of $80.89 in December last year. It had fallen to a low of $27.05 in June this year.

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