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Factors Setting the Tone For Smartsheet's (SMAR) Q4 Earnings

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Smartsheet Inc. SMAR is scheduled to release fourth-quarter fiscal 2021 results on Mar 16.

For the fiscal fourth quarter, the company expects revenues between $102 million and $103 million. The Zacks Consensus Estimate for revenues is currently pegged at $102.53 million, which suggests growth of 30.6% from the year-ago reported figure.

Moreover, non-GAAP loss is anticipated to be 15-13 cents. The consensus mark for fiscal fourth-quarter loss has been steady at 14 cents per share in the past 30 days. Non-GAAP net loss per share was 13 cents in fourth-quarter fiscal 2020.

Factors Likely to Have Influenced Q4 Results

Growing clout of Smartdashboards, Smartportals, Smartcards, Smartgrids, Smartprojects, Smartcalendars, Smartforms, Smartautomation and Smartintegrations is likely to get reflected in the fiscal fourth-quarter revenues.

Momentum in digital transformation trends owing to coronavirus crisis induced work-from-home and online learning wave is expected to have fueled adoption of Smartsheet’s cloud-based platforms, which facilitate execution of work and aid teams and organizations to plan, automate, manage and report work.

Besides, the company’s significant investments in product innovation and efforts to enhance the reach of their products through advertising campaigns may have aided it in acquiring new customers and retaining existing ones in the fiscal fourth quarter.

Smartsheet Inc. Price and EPS Surprise

Smartsheet Inc. Price and EPS Surprise
Smartsheet Inc. Price and EPS Surprise

Smartsheet Inc. price-eps-surprise | Smartsheet Inc. Quote

Further, the company has been constantly rolling out new product offerings to boost value for customers. Additionally, Smartsheet’s efforts to enter new markets and improve existing product capabilities might get reflected in subscription revenues in the to-be-reported quarter.

Notably, the Zacks Consensus Estimate for subscription revenues for the fiscal fourth quarter is pegged at $94 million, indicating growth of 32.3% on a year-over-year basis.

In addition, the company’s Smartsheet Gov has received Provisional Authorization (PA) by the Defense Information Systems Agency (DISA) at Impact Level (IL) 4.

These factors are likely to have helped the company in attracting new customers and expanding existing government agencies’ client base in quarter to be reported.

Moreover, the global COVID-19 outbreak is likely to have aided Smartsheet’s offerings in gaining momentum, backed by higher demand for robust data collection and risk assessment capabilities across industries including life sciences, healthcare, finance, technology, and manufacturing.

In the last reported quarter, the company’s dollar net retention rate was 125%. Moreover, Smartsheet’s average ACV per domain-based customer increased 42% year over year to $4,665. This trend is likely to have continued in the to-be-reported quarter driven by expanded use of Smartsheet’s platform. In fact, Smartsheet’s customer base that includes Mimecast MIME, QAD Inc. QADA, and Boomi, which is part of Dell Technologies’ DELL business, and KEEN, Inc., grew during the fiscal fourth quarter.

Notably, Delivery Hero, a notable local delivery service platform, selected Smartsheet to streamline work management, boost real-time visibility and drive business value. By leveraging Smartsheet’s platform, Delivery Hero witnessed considerable time savings via consolidation of projects and status reporting. The elevated productivity will enable the team to focus on value-adding tasks and bolster business growth.

Also, the company’s expanding international presence might have contributed to the fiscal fourth-quarter performance.

During the fiscal third quarter, Smartsheet concluded Brandfolder buyout. Markedly, on Aug 24, 2020, the company had inked deal to acquire Denver, CO-based, Brandfolder, in a bid to gain digital asset management capabilities and strengthen product portfolio to facilitate dynamic work.

Synergies from Brandfolder acquisition, which contributed approximately $1.7 million to revenues and $3.2 million to billings in the fiscal third quarter, is expected to have benefited fiscal fourth-quarter performance.

Although investments on product enhancements and acquisitions bode well over the longer haul, it is likely to have kept Smartsheet’s margins under pressure in the quarter to be reported.

Furthermore, higher expenditure on brand advertising, amid stiff competition from Zoho and monday.com, may have weighed on the company’s profitability in the quarter under review.

Additionally, COVID-19 led macroeconomic weakness induced reduced spend across small and medium sized business (SMB) is anticipated to have limited growth in the fiscal fourth quarter.

Smartsheet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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