So yeah many have been racking our heads trying to figure out SMAR. What’s its hook, it’s differentiation, and how is it’s large customer spend and average annual contract skyrocketing? How are they achieving 60% revenue growth and accelerating Billings to 69%? Raising guidance? Guidance is 52% on top end and I believe one of the highest guides we’ve had of late(not that I really put too much in those).
We’ve tried a variety of explanations as to what Smartsheets’s moat is. Most of them are valid. Bottom line on most of what we’ve come up with is that it’s based on a familiar program interface and has the fullest feature set and combines the project management, collaboration, and execution functionality. All of those make them a leader but maybe not the leader in project management software. Is that enough to make them perform so well?
But in re-reading the latest call, by Jove I think I’ve got it. They have a few unique and high value add-ons they call Accelerators that bring an appeal from higher up an organizations food chain. So here’s a few snips.
We also announced 23 new product enhancements and capabilities at ENGAGE including enhanced dashboards, assignment capabilities, time-based triggers, and a visual workflow builder. We launched new premium offerings that open up an even greater range of high value use cases. Data Uploader, which automatically merges or replaces data from third-party systems into Smartsheet without the need to manually copy and paste and dynamic view which delivers granular sharing controls, enabling customers to achieve unprecedented level of control over what information is to share in a sheet, and importantly, what information is not. We also announced two new Connectors for Tableau and Microsoft Dynamics.
These new product enhancements are delivering additional value for our customers. For example, Johnny Rockets, an international restaurant chain has legal and development teams that regularly need to share confidential contract details with internal and external stakeholders. Prior to Dynamic View, this information was kept in separate documents to maintain confidentiality. By leveraging the sharing controls of Dynamic View, they now have one centralized Smartsheet to track and update this sensitive information and can share customized, confidential views of contract details with all relevant stakeholders.
A Fortune 100 technology company is using our Data Uploader for two high-value workflows. The first enables them one way pulls of their data from their CRM system into Smartsheet to inform their efforts of applications, development, and marketing teams and in the second use case they’re using Data Uploader to pull information from their learning management systems into Smartsheet to improve reseller, capacity forecasting, and reporting to executives.
Here’s an exchange amongst management and an analysts about Smartsheet core vs the Accelerators and add-ons.
Hey, guys. This is actually Arjun on for Bhavan. Great job on the quarter and thanks for taking my question. I just wanted to ask one on the additional monetization opportunities, right? You’ve talked about all the products and premium features that you’ve introduced. I think you had the Accelerators, Dynamic View, Data Uploader – all those. But, I’m just curious where is Smartsheet in terms of revenue from the core platform versus these premium add-ons today? And, as you become more deeply engrained in your customers’ processes, what could this look like in the next three to five years?
Yes, so this is Jenny. I’ll take this. In terms of our bookings for the quarter, I think last quarter we mentioned roughly 12% of our bookings were in non-seed-based licenses or subscriptions. We saw that definitely tick up this quarter, closer to the high teens, close to 20%. In terms of our revenue, it inched up one percentage point to 7% of our subscription revenue. And, over time, just based on the opportunity that we have in these solutions, I would expect that it would grow. But I do think that we will see continued demand from state licensing as well.
Read that last bold again. So the non-seeded billings, which I read as anything added on to a subscription to the smart sheet platform, went from 12% of Billings, to 20% of Billings. Sequentially. So we can figure that out.
20% of Q3 billings of $54.9M is $11M in Billings.
12% of Q2 billings of $52.2M is $6.2M in billings.
11/6.2 = 77.4% growth qoq. Q2 to Q3. The impact on revenue was not as substantial but I’m interested to see how that plays out.
Could this be one reason why stock nearly double since early Jan (when I started buying SMAR). I thought the run up a little over done and trimmed a little last week. But I’m strongly considering adding back after looking at that. I know it’s not huge money now but 77% growth in a quarter is over 450% annualized at 20% of billings.