SMAR-Guidance vs Actual

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Starting with guidance from Q1 report for Q2

Total revenue of $38.5 million to $39.5 million representing year-over-year growth of 44% to 48%

Actual Q2

Second quarter total revenue grew 59% year-over-year to $42.4 million

Forecast for Q3

Total revenue of $43.5 million to $44.5 million representing year-over-year growth of 48% to 51%

Actual Q3

Third quarter total revenue grew 59% year-over-year to $46.9 million

Forecast for Q4

Total revenue of $49.0 million to $50.0 million, representing year-over-year growth of 49% to 52%

Actual Q4

Fourth quarter total revenue grew 58% year over year to $52.2 million

Forecast for Q1

Total revenue of $54.0 million to $55.0 million, representing year-over-year growth of 49% to 51%

Actual Q1? They beat by a low of $2M and a high of $3M for those couple of quarters for 57%-60% growth

Darth

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Hi Darth,

This is an interesting pattern… I noticed this with most of the rapid growth companies discussed here.

These companies routinely beat their guidance… what is more interesting is that analysts average generally match companies’ guidance… party because they ought to be conservative and partly to avoid personal pain when the company actually fails to beat the guidance…

however, net effect is that when the company reports sizable beat… AND many times raises next Q, the stock jumps… this is a pattern we all love with these companies…

Here is SMAR table format


Guidance and track record: Revenue $M				
	Reported Projected  Beat $M	Beat %
2019-04		 $54.5		
2019-01	$52.2	 $49.5	    $2.7	5%
2018-10	$46.8	 $44.0	    $2.8	6%
2018-07	$42.4	 $39.0	    $3.4	9%

If you look at Yahoo finance, 6 analysts average at $52.05 for next Q with a high of $53.4M
https://finance.yahoo.com/quote/smar/analysis?p=smar
while company is guiding midpoint at $54.5M

I believe it will be more like $57M just accounting for the beat that you pointed out.
I maintain many of these at rysrstocks.com
which is free to use for now.

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I like’s Saul’s take on guidance – basically you can ignore it and follow the actual numbers, assuming the company doesn’t change its tone with regard to guidance.

So if a company is growing as you expect (or better), says everything is great, this is what we’re doing, then guides for lower growth (say 10-15% lower) then it probably doesn’t mean much, or at least not enough to take action. You just have to hold and see if they continue to grow at the target rate (whether it’s 30% or 40% or 70%). When actual results start to falter is when you consider selling.

But if it’s NTNX guiding for 30-40% less growth and giving a significant reason for it – our sales team failed to execute – it’s a much bigger issue and something to consider selling based on guidance.

Maybe you’ll take a hit when a company doesn’t beat estimates for some unexpected reason but for the most part, especially given that the conference calls take place partway through the next quarter, it’s the discussion and tone that will tell you whether business is still running along smoothly or to expect challenges.

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