Smartsheets also released their Q4 results after market close today.
Another solid quarter, another big yawn from the after hours market.
- Fourth quarter total revenue grew 40% year over year to $109.9 million
- Fourth quarter calculated billings grew 49% year over year to $151.2 million
Nice to see billings growing at almost 50%. That a good omen for future period growth.
Subscription revenue represents about 92% of total revenue, and is growing at 42%, slightly higher than the overall revenue growth rate.
After growing revenue pretty consistently at around 50% pre-pandemic, the past four quarters have shown pretty consistent growth right around 40%. They had guided Q4 for 31% when they announced Q3 in December, but beat pretty well coming in at +40% for Q4.
Their new guidance going forward is about +31% for both Q1, and FY (this is fiscal 2022 that just started). I’m betting there is some sandbagging and they keep growing around 40% over the next year.
Their focus on large customers is paying off, and big customer count grew at really nice rates:
- The number of all customers with ACV of $50,000 or more grew to 1,515, an increase of 58% year over year
- The number of all customers with ACV of $100,000 or more grew to 588, an increase of 68% year over year
Same story with Dollar-based net retention rate, showing that their land and expand strategy is going really well. Large customers are expanding much faster than the overall average:
- Overall total Dollar-based net retention rate was 123%
- Customers with ACV > $5,000 had NRR of 127%
- Customers with at least 10,000 employees had NRR of 140%
On the conference call they said they currently have 2,800 customers with more than 10,000 employees (that’s the group above expanding NRR at 140%) and today, only 41 of those 2,800 customers currently spend at least $500,000 per year with Smartsheets. Management believes that they are going to grow that number significantly in coming years, driving a lot of growth from existing customers getting larger and larger with spend.
I know I sound like a broken record, but Smartsheets’ valuation still appears inexplicably low to me, given their growth rates of 40%+ over an extended period of time, which is likely to continue. The market either wants to see them get closer to profitability and cash flow positivity, or they are dismissed because they just sound like a dull, unexciting company, or heavy reliance on the conservative guidance. Probably a combination of all of the above.
Either way, I’m happy to continue holding SMAR as a medium sized, 5% holding in my portfolio. I had predicted in my year-end writeup that Smartsheets could get acquired during 2021, and if they keep turning in quarters like this one, without much movement in the stock price, I think being acquired becomes a bigger possibility.