Smartsheet: Highly Versatile And Consistent

Apr. 28, 2020 11:43 PM ETSmartsheet Inc. (SMAR)4 Comments
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  • Smartsheet's versatile and flexible cloud offering enables over 2,000 use cases ranging from project management to expense tracking.
  • Product adoptions across SME and enterprise segments have been solid. Revenue has consistently grown by 50%, while large accounts have grown by +5x over the last two years.
  • The versatility also allows cross-division/function market penetration. This has had a positive impact on its best-in-class 135% net retention.


Smartsheet’s (NYSE:SMAR) product is unique in that it is highly versatile. As its CEO Mark Mader mentioned in the Q4 earnings call, Smartsheet works as an orchestration layer that sits either on top of or below the existing enterprise cloud products. In practice, we are seeing how Smartsheet’s versatility allows it to unlock various use cases, such as project management, employee onboarding tool, expense tracking, or campaign management. Such a unique product positioning is disruptive and hence a long-term catalyst for the stock. As a result, the stock offers an interesting growth investment opportunity. Since its IPO in 2018, the share price has more than doubled as key metrics have strengthened.


Due to its versatility and flexibility, Smartsheet’s offering is highly generic and offers a lot of use cases. The company’s 10-K indicates that there are over 2,000 use cases that it has unlocked so far. The expansion/upsell opportunities occur as users demand more premium features, such as visualization of live data and premium application connectors and apps. Based on our observation on the Standard pricing plan, the data visualization feature, reporting, and group management appear to be some of the triggers for upgrading from the $14/month to the $25/month tier. The larger ACV (Annual Contract Value) deals happen on the Enterprise plan, where premium support, apps, and connectors to other enterprise offerings such as Tableau, Salesforce (CRM), or Jira (TEAM) are available.

(Source: Company’s 10-K)

So far, the adoption and expansion across the low- to high-ACV clients have been impressive. The company has been able to maintain a solid ~80% gross margin, which reflects efficiency in go-to-market, while increasing the number of high-ACV clients by over 5x in just over 2 years. The company also grew its full-year revenue by 52% YoY to $270.9 million in 2019. Furthermore, the typical enterprise plan clients have also boosted the dollar-based net

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Asset manager investing in technology opportunities driving disruptive innovation globally.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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