Smartsheet Impresses Analysts With FY24 Profitability And FCF Focus Post Upbeat Q4

Needham analyst Scott Berg reiterates Smartsheet Inc SMAR with a Buy and a $57 price target.

The company beat all 4Q financial metrics, but its 3.8% billings outperformance was weak relative to the recent quarter, supporting management's view on longer sales cycles and modestly weaker expansion activity. 

While the macro commentary was essentially likely, on the positive side, the analyst views several underlying metrics, including strong capability sales and enterprise expansion, as better indications of the inherent SMAR platform. 

Berg also notes that FY24 profitability guidance was materially ahead of expectations suggesting a more efficient S&M model as SMAR tweaks its sales resources. 

KeyBanc analyst Jason Celino maintains Smartsheet with an Overweight, raising the price target from $48 to $53.

Smartsheet posted better 4Q results, beating top and bottom-line expectations. 

While FY24 revenue guidance was a little lighter than anticipated, Celino believes the company is being outwardly conservative on the top line due to macro. More importantly, it issued a meaningfully better profitability outlook as it continued to focus on operational efficiency. Encouraged by accelerated profitability, the analyst boosted the price target.

RBC Capital analyst Rishi Jaluria maintains Smartsheet with a Sector Perform, raising the price target from $36 to $43.

SMAR reported a solid quarter, leading shares up 13% AMC. 

The key takeaways were profitability and 12% FCF margin guidance in FY24, macro impacts leading to further deceleration in billings and DBNRR, conservative guidance calling for an additional deteriorating macro, and solid enterprise momentum in the quarter. 

The analyst views the quarter positively but remains sidelined over concerns around TAM and competition.

Credit Suisse analyst Fred Lee reiterates Smartsheet with a Neutral and a $40 price target.

SMAR posted yet another impressive quarter despite incrementally more challenging macro. 

The company continues to penetrate the enterprise successfully, evidenced by the growth of this segment outpacing the rest of the customer base. 

On the product front, Smartsheet Advance, while just single digits from a penetration perspective, appears to have inflected in the quarter and is likely a key driver for years to come. 

While FY24 guidance assumes the continuation of deteriorating macro, which has manifested in more minor expansions and longer sales cycles, management noted several times that a stabilization in macro would yield an upside to guidance, signaling significant conservatism.

Price Action: SMAR shares traded higher by 15.26% at $44.08 on the last check Wednesday.