Company Reports

Narrow-moat Smartsheet reported reasonable fourth-quarter and full-year fiscal 2024 results, with top-line growth marginally below our above-guidance forecast, but with profitability surprising to the upside. Smartsheet continues to achieve healthy traction in the sticky enterprise market, which supported the firm reaching $1 billion in annual recurring revenue during the fourth quarter. Following the result, we raise our fair value estimate to $56 per share from $53 due to the time value of money and a slight uptick in our long-term profitability assumptions. At current prices, Smartsheet shares screen as attractive for investors looking to own a quality software name at a sizable discount to our valuation. We believe investors have overreacted to near-term macroeconomic pressures already factored into our forecasts, with shares falling 10% in afterhours trading.

Smartsheet is a leading provider of collaborative work management, or CWM, SaaS solutions. The emerging SaaS niche aims to improve the efficiency and productivity of project and process management by displacing widely deployed but suboptimal incumbent tools of email and spreadsheets. Smartsheet’s platform allows nontechnical users to configure, automate, and visualize custom workflows and notifications, dynamically assign tasks and permission data access, and build centralized dashboards for real-time visibility, accountability, and consistency across projects. The platform leverages integrations to adjacent business applications and productivity tools to centralize data, reduce error-prone manual data entry, and improve process efficiency.

Smartsheet is a leading provider of collaborative work management, or CWM, SaaS solutions. The emerging SaaS niche aims to improve the efficiency and productivity of project and process management by displacing widely deployed but suboptimal incumbent tools of email and spreadsheets. Smartsheet’s platform allows nontechnical users to configure, automate, and visualize custom workflows and notifications, dynamically assign tasks and permission data access, and build centralized dashboards for real-time visibility, accountability, and consistency across projects. The platform leverages integrations to adjacent business applications and productivity tools to centralize data, reduce error-prone manual data entry, and improve process efficiency.

We maintain our $53 fair value estimate for narrow-moat Smartsheet following the release of robust third-quarter results, with top-line growth broadly tracking our expectations but profitability surprising to the upside. Smartsheet continues to report impressive enterprise adoption and a sequential reacceleration in bookings despite macroeconomic headwinds. Following the result, we have lifted our fiscal 2024 profitability assumptions, however, our longer-term forecasts remain intact. After rallying over the past month, Smartsheet shares now trade in line with our unchanged valuation.

Smartsheet is a leading provider of collaborative work management, or CWM, SaaS solutions. The emerging SaaS niche aims to improve the efficiency and productivity of project and process management by displacing widely deployed but suboptimal incumbent tools of email and spreadsheets. Smartsheet’s platform allows nontechnical users to configure, automate, and visualize custom workflows and notifications, dynamically assign tasks and permission data access, and build centralized dashboards for real-time visibility, accountability, and consistency across projects. The platform leverages integrations to adjacent business applications and productivity tools to centralize data, reduce error-prone manual data entry, and improve process efficiency.

We launch coverage of Smartsheet with a $53 fair value estimate and a narrow moat rating. Smartsheet is a leading provider of collaborative work management, or CWM, software-as-a-service solutions and enjoys high customer switching costs underpinning our moat rating. The emerging CWM SaaS niche aims to improve the efficiency and productivity of project and process management by displacing widely deployed but suboptimal incumbent tools of email and spreadsheets. While we expect multiple CWM vendors to capture share of the expansive addressable market for purpose-built project management tools, we believe Smartsheet is well-placed to rapidly expand within existing clients and become the enterprise, IT-certified vendor of choice. At current prices, Smartsheet shares screen as undervalued, trading at a hefty 25% discount to our fair value estimate.