Smartsheet Acquiring Bootstrapped Startups To Drive Growth

According to a MarketsandMarkets research report, the global Enterprise Collaboration Software market is expected to grow from $34.6 billion in 2018 to $59.9 billion by 2023, translating to an annualized growth rate of nearly 12% over the five year period. Billion Dollar Unicorn Smartsheet (Nasdaq: SMAR) recently announced its second acquisition in a bid to keep itself ahead of the pack in this high growth market.

Smartsheet’s Financials

For the third quarter of the year, Smartsheet’s revenues grew an impressive 59% over the year to $46.9 million. They were significantly ahead of the market’s forecast of $44.12 million. It ended the quarter with a net loss of $16.4 million. On an adjusted basis, it reported a loss of $0.09 per share, compared with the Street’s forecast of a loss of $0.16 per share.

By segment, Smartsheet’s subscription revenues for the quarter grew 57% to $41.5 million and professional services revenues grew 81% to $5.3 million. It recorded billings of $54.9 million, translating to a growth of 69% over the year.

Among key operating metrics, Smartsheet ended the quarter with 77,893 domain-based customers. The number of all customers with annualized contract values (ACV) of more than $50,000 grew nearly 148% to 360. Average ACV per domain-based customer increased 48% over the year and 11% over the quarter to $2,214.

For the current quarter, Smartsheet expects revenues of $49-$50 million with a non-GAAP net loss per share of $0.15-$0.13. It expects to end the fiscal with revenues of $174.6-$175.6 million with a non-GAAP net loss per share of $0.44-$0.42. Analysts were expecting the company to report its current quarter revenues of $49.6 million and fiscal 2019 revenues of $175.2 million.

Smartsheet’s Product Upgrades

Smartsheet began as a “hybrid of multiple concepts” where it wanted to build a collaborative working platform that could integrate a spreadsheet with a Sharepoint with a Google Forms application. But since being founded, it has become more than a collaborative platform to a mission-critical work execution platform needed by organizations to drive processes across their business. Analysts believe that collaborative work management (CWM) technologies are no longer optional, but have become a requirement for businesses.

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Disclaimer: More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion ...

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