Smartsheet Q3 earnings preview: Customer growth rate likely to play a major role

Cloud-based solutions provider Smartsheet (SMAR) is slated to report its third quarter ending October 31 earnings results on Monday, December 3 after the market close. This is the third time the company is reporting its quarterly results after going public in April this year. Analysts expect the company to post a loss of $0.16 per share on revenues of $44 million for the recently ended quarter.

Smartsheet, a cloud-based platform, provides work management tools for organizations and generates revenue primarily from the sale of subscriptions. The company offers subscriptions at three levels; individual, business and enterprise. As of July 31, 2018, the company had 76,693 domain-based customers compared to 71,021 at the end of July 31, 2017.

For the second quarter of 2019, Smartsheet reported a loss of 8 cents per share on revenues of $42 million, beating the estimates. The consensus estimate was pegged at loss to be 14 cents per share on revenues of $39 million. Year-over-year revenue growth of 59% was driven by strong product portfolio and growing customer base.

The Bellevue, Washington-based tech firm had projected Q3 revenue to be between $43.5 million and $44.5 million, representing a year-over-year growth of 48% to 51% and non-GAAP net loss per share of $0.16 to $0.15.

For FY19, the company expects revenue to be between $167 million to $169 million, representing year-over-year growth of 50% to 52% and non-GAAP net loss per share of $0.56 to $0.52. Billings for the fiscal year is expected to grow in the range of 48-50% to a range of $201 million to $204 million.

In the second quarter, billings grew 55% to $52 million. Subscription revenue, which accounted for 88% of the company’s total revenue, surged 57% and services revenue jumped 71% compared to the prior year quarter. Smartsheet increased its presence in Fortune 500 companies to 72% and the total number of all Smartsheet users across paid and collaborators grew to more than 4.2 million.

Cloud computing firm Smartsheet to join the IPO league

Cloud-based service providers like Workday (WDAY), ServiceNow (NOW) and Adobe (ADBE) gained momentum in this week encouraged by the upbeat results and strong outlook from cloud giant Salesforce (CRM).

Shares of Smartsheet were trading in the positive territory during Friday’s regular trading session. Smartsheet’s stock had so far gained nearly 80% from its IPO price of $15 per share.

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