Smartsheet (NYSE:SMAR) - Share price, News & Analysis

Q: What is the Fair Price of SMAR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

SMAR ($34.58) is trading below our estimate of [[fair value]] ($52.66)

SMAR fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	2/6
Past Performance	0/6
Financial Health	5/6
Dividends	0/6

SMAR Stock Overview

Smartsheet Inc. provides cloud-based enterprise platform to plan, capture, manage, automate, and report on work for teams and organizations.

Rewards

Trading at 34.3% below our estimate of its fair value

Revenue is forecast to grow 24.29% per year

Risk Analysis

Earnings are forecast to decline by an average of 8.8% per year for the next 3 years

Currently unprofitable and not forecast to become profitable over the next 3 years

Significant insider selling over the past 3 months

Shareholders have been diluted in the past year

Smartsheet Competitors

RingCentral

NYSE:RNG

US$4.5b

Coupa Software

NasdaqGS:COUP

US$5.8b

Sprout Social

NasdaqCM:SPT

US$3.4b

Alteryx

NYSE:AYX

US$4.3b

Price History & Performance

Summary of all time highs, changes and price drops for Smartsheet
Historical stock prices
Current Share Price	US$34.58
52 Week High	US$85.65
52 Week Low	US$27.05
Beta	1.47
1 Month Change	0.029%
3 Month Change	-20.80%
1 Year Change	-51.73%
3 Year Change	-28.49%
5 Year Change	n/a
Change since IPO	77.33%

Recent News & Updates

Jul 23

Smartsheet: The Best Deal In The Software Sector

Shares of Smartsheet have fallen 60% this year, despite strong fundamental performance. Revenue growth has continued at a >40% y/y pace. The company has cited that it has not yet seen material impacts from macro conditions on its sales. Low employee attrition and successful sales hiring position Smartsheet well for continued growth. Trading at As momentum for a year-end rally builds, investors should emphasize their stock selection on growth-oriented value stocks that have been severely beaten down this year. When growth kicks back into being "popular", these beaten-down names that have plenty of valuation rope to climb have tremendous potential to beat the S&P 500. Smartsheet (SMAR), in my view, is an excellent stock that fits this bill. This enterprise software platform helps distributed teams collaborate and track project milestones, a well-established tool that has been deployed at over 90% of the Fortune 100 (including names like American Express (AXP) and Procter & Gamble (PG), among others). Despite continued fundamental strength, Smartsheet has fallen tremendously this year on weakened sentiment. Instead of choosing to see Smartsheet for a relatively young company that is still growing and scaling, investors have sold off the company for its high GAAP losses. Year-to-date, the stock has lost 60% of its value: Data by YCharts My advice here: don't forget the power of the software business model and why investors were so drawn to SaaS names prior to this year's correction. Software companies invest tremendously into product development, sales, and marketing early on in their lifespans, splashing deep red ink onto the financials. Yet at high gross margins, and with sticky recurring revenue contracts that tend to grow over time as customers expand their purchases, software companies eventually mature into very profitable businesses - it just takes the foresight and willingness to look beyond the short term. Due to Smartsheet's continued slide despite strong fundamental performance, I'm upgrading my view on Smartsheet to very bullish. Don't miss the opportunity to buy this stock at a very cheap price ahead of a potential year-end market rally. For investors who are newer to this name, here are the key reasons to be bullish on Smartsheet: Remote work is going to continue being the "new normal". Now realizing that productivity doesn't suffer as much as originally thought when teams go remote, some companies are relaxing their expectations for employees to be fully back in the office even after the pandemic subsides. Some companies have even let their employees know it's okay to work remotely indefinitely. But remote teams need a workspace to collaborate in, and tools like Smartsheet are perfect complements for that. This is especially true for distributed teams, where people are in different locations and some are in-person while others are remote: tools like Smartsheet help to rein in the geographic distance. High gross margins. Smartsheet's 80%+ pro forma gross margins are among the highest in the software industry, and enable the company to achieve significant operating leverage as it scales. Smartsheet is moving to bigger and bigger deals, and expansion rates remain high. As Smartsheet has proven its utility and flexed its muscles as a more prominent public company, the company has been able to sign larger deals. In its most recent quarter, its count of >$100k ACV customers grew 74% y/y to more than 1k such customers. The average customer is also upgrading their relationship with Smartsheet: net revenue retention rates are clocking in around 130%, which exceeds most other SaaS stocks. Horizontal software and broad use cases. Smartsheet is broadly applicable to virtually any industry and virtually any team or function within a company, making its addressable market wide. Broadening its product platform. Smartsheet made its first major acquisition in 2020 of a company called Brandfolder, which helps companies manage and run analytics on their digital web content. In late 2021, the company also released a premium version of its product called Smartsheet Advance. Continued product rollouts could lead to expanding use cases and a larger TAM for Smartsheet. And despite these strengths, Smartsheet's YTD declines have rendered its stock at an incredibly attractive value. At current share prices near $31, Smartsheet trades at a market cap of $4.06 billion. After we net off the $446.7 million of cash on the company's most recent balance sheet, the company's resulting enterprise value is $3.61 billion. For the current fiscal year FY23 (which for Smartsheet is the year ending in January 2023), Smartsheet has guided to revenue of $756-$761 million, representing 37-38% y/y growth, up slightly from a prior range of 36-37% y/y growth. Smartsheet outlook (Smartsheet Q1 investor presentation) Against the midpoint of this revenue outlook, Smartsheet trades at just 4.7x EV/FY23 revenue - which is an incredibly low multiple for a software company growing north of >40% y/y. The bottom line here: There is a huge disconnect between Smartsheet's fundamentals at its current trading levels. While it may take some time for sentiment to recover on Smartsheet, the company's latest trend of beat-and-raise quarters should help lift investors' spirits over time. Don't pass up this rare, overlooked opportunity. Q1 download Let's now go through Smartsheet's latest quarterly results in greater detail. The Q1 earnings summary is shown below: Smartsheet Q1 results (Smartsheet Q1 investor presentation) Smartsheet's revenue in Q1 grew 43% y/y to $168.3 million, beating Wall Street's expectations of $162.5 million (+39% y/y) by a four-point margin. Revenue growth also kept the exact same pace as last quarter's 43% y/y growth rate. Now, one potential yellow flag for Smartsheet's growth trajectory is billings. As software investors are aware, billings represent a better indicator of a company's longer-term growth potential than revenue, as it captures deals signed in the quarter that won't be recognized as revenue until future quarters. In Q1, Smartsheet's billings grew 36% y/y, decelerating from the mid-high 40s in the past few quarters. There could be an element of timing and linearity here, however, as Smartsheet had a very strong Q4 billings quarter in which billings growth exceeded revenue growth by five points. Smartsheet Q1 billings (Smartsheet Q1 investor presentation) Smartsheet has noted that so far, it has not seen any tighter macro conditions impacting its sales execution. This does stand in contrast versus many other enterprise tech companies, some of which have reported lengthening deal cycles as companies pull back spending in anticipation of a recession.

Jul 21

We're Not Worried About Smartsheet's (NYSE:SMAR) Cash Burn

Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the...

Shareholder Returns

	SMAR	US Software	US Market
7D	15.0%	4.8%	1.0%
1Y	-51.7%	-17.7%	-12.9%

Return vs Industry: SMAR underperformed the US Software industry which returned -17.7% over the past year.

Return vs Market: SMAR underperformed the US Market which returned -12.8% over the past year.

Price Volatility

Is SMAR's price volatile compared to industry and market?
SMAR volatility
SMAR Average Weekly Movement	11.0%
Software Industry Average Movement	10.7%
Market Average Movement	7.9%
10% most volatile stocks in US Market	17.1%
10% least volatile stocks in US Market	3.2%

Stable Share Price: SMAR is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 11% a week.

Volatility Over Time: SMAR's weekly volatility (11%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2005	2,938	Mark Mader	https://www.smartsheet.com

Smartsheet Inc. provides cloud-based enterprise platform to plan, capture, manage, automate, and report on work for teams and organizations. The company offers Dashboards for real-time visibility into the status of work to align individuals, managers, and executives; Portals to locate and access from any device the resources available for a project without IT assistance; Cardview to organize, share, and act on workflows; and Grid to keep teams on task by tracking multiple moving parts. It also provides Reports that allow users to see and action their work in one centralized location; Projects, which offers interface with capabilities that foster collaboration among teams and organizations; Calendar that align teams and organizations by connecting deadlines to workflows; Forms to collect information in a structured and consistent format; Automated actions to automate repetitive processes; and Integrations to connect, sync, and extend existing enterprise applications across workflows to create work execution.

Smartsheet Fundamentals Summary

How do Smartsheet's earnings and revenue compare to its market cap?
SMAR fundamental statistics
Market Cap	US$4.48b
Earnings (TTM)	-US$204.48m
Revenue (TTM)	US$602.06m

7.4x

P/S Ratio

-21.9x

P/E Ratio

Is SMAR overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
SMAR income statement (TTM)
Revenue	US$602.06m
Cost of Revenue	US$127.06m
Gross Profit	US$475.00m
Other Expenses	US$679.48m
Earnings	-US$204.48m

Last Reported Earnings

Apr 30, 2022

Next Earnings Date

Sep 01, 2022

Earnings per share (EPS)	-1.58
Gross Margin	78.90%
Net Profit Margin	-33.96%
Debt/Equity Ratio	0%

How did SMAR perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is SMAR undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for SMAR?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for SMAR. This is calculated by dividing SMAR's market cap by their current preferred multiple.
What is SMAR's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$4.48b

SMAR key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	6.8x
Enterprise Value/EBITDA	-23.6x
PEG Ratio	n/a

Price to Sales Ratio vs Peers

How does SMAR's PS Ratio compare to its peers?

SMAR PS Ratio vs Peers

The above table shows the PS ratio for SMAR vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PS	Estimated Growth	Market Cap
Peer Average	6.6x
RNG RingCentral	2.5x	20.4%	US$4.5b
COUP Coupa Software	7.7x	20.0%	US$5.8b
SPT Sprout Social	15.2x	27.1%	US$3.4b
AYX Alteryx	6.7x	15.3%	US$4.3b
SMAR Smartsheet	7.4x	24.3%	US$4.5b

Price-To-Sales vs Peers: SMAR is expensive based on its Price-To-Sales Ratio (7.4x) compared to the peer average (6.6x).

Price to Earnings Ratio vs Industry

How does SMAR's PE Ratio compare vs other companies in the US Software Industry?

Price-To-Sales vs Industry: SMAR is expensive based on its Price-To-Sales Ratio (7.4x) compared to the US Software industry average (5.2x)

Price to Sales Ratio vs Fair Ratio

What is SMAR's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

SMAR PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio	7.4x
Fair PS Ratio	10.9x

Price-To-Sales vs Fair Ratio: SMAR is good value based on its Price-To-Sales Ratio (7.4x) compared to the estimated Fair Price-To-Sales Ratio (10.9x).

Share Price vs Fair Value

What is the Fair Price of SMAR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: SMAR ($34.58) is trading below our estimate of fair value ($52.66)

Significantly Below Fair Value: SMAR is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.

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Future Growth

How is Smartsheet forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-8.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: SMAR is forecast to remain unprofitable over the next 3 years.

Earnings vs Market: SMAR is forecast to remain unprofitable over the next 3 years.

High Growth Earnings: SMAR is forecast to remain unprofitable over the next 3 years.

Revenue vs Market: SMAR's revenue (24.3% per year) is forecast to grow faster than the US market (7.9% per year).

High Growth Revenue: SMAR's revenue (24.3% per year) is forecast to grow faster than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: SMAR is forecast to be unprofitable in 3 years.

Discover growth companies

Past Performance

How has Smartsheet performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-31.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: SMAR is currently unprofitable.

Growing Profit Margin: SMAR is currently unprofitable.

Past Earnings Growth Analysis

Earnings Trend: SMAR is unprofitable, and losses have increased over the past 5 years at a rate of 31.7% per year.

Accelerating Growth: Unable to compare SMAR's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: SMAR is unprofitable, making it difficult to compare its past year earnings growth to the Software industry (18.5%).

Return on Equity

High ROE: SMAR has a negative Return on Equity (-42.51%), as it is currently unprofitable.

Discover strong past performing companies

Financial Health

How is Smartsheet's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Stable Cash Runway
Forecast Cash Runway

Financial Position Analysis

Short Term Liabilities: SMAR's short term assets ($612.1M) exceed its short term liabilities ($442.1M).

Long Term Liabilities: SMAR's short term assets ($612.1M) exceed its long term liabilities ($58.9M).

Debt to Equity History and Analysis

Debt Level: SMAR is debt free.

Reducing Debt: SMAR has not had any debt for past 5 years.

Balance Sheet

Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: SMAR has sufficient cash runway for more than 3 years based on its current free cash flow.

Forecast Cash Runway: Insufficient data to determine if SMAR has enough cash runway if its free cash flow continues to grow or shrink based on historical rates.

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Dividend

What is Smartsheet current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate SMAR's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate SMAR's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if SMAR's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if SMAR's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as SMAR has not reported any payouts.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

9.1yrs

Average management tenure

CEO

Mark Mader (51 yo)

16.58yrs

Tenure

US$15,632,439

Compensation

Mr. Mark P. Mader is a Director at Zoom Information, Inc. He serves as an Outside Independent Director at ZoomInfo Technologies Inc. since February 2020. He served as a member of the Board of Managers/Dire...

CEO Compensation Analysis

Compensation vs Market: Mark's total compensation ($USD15.63M) is above average for companies of similar size in the US market ($USD6.58M).

Compensation vs Earnings: Mark's compensation has increased whilst the company is unprofitable.

Leadership Team

Experienced Management: SMAR's management team is seasoned and experienced (9.1 years average tenure).

Board Members

Experienced Board: SMAR's board of directors are considered experienced (5 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: SMAR insiders have only sold shares in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.5%.

Data	Last Updated (UTC time)
Company Analysis	2022/08/06 00:00
End of Day Share Price	2022/08/05 00:00
Earnings	2022/04/30
Annual Earnings	2022/01/31