BMO Capital Markets analyst Keith Bachman reiterated an Outperform rating on Smartsheet Inc. SMAR, raising the price target to $50 from $44.
The company reported Q2 FY24 revenue growth of 26% Y/Y to $235.6 million, beating the consensus of $229.51 million. Adjusted EPS of $0.16 exceeded the consensus of $0.07.
The analyst believes SMAR’s quarter was better across the board, highlighted by three factors - upside to billings, upside to operating and FCF margins, and generally steady customer metrics.
Further, Bachman thinks new AI offerings and monetization strategies are intriguing, looking ahead to FY25.
The analyst expects some modest upside to the October quarter. While management continues to guide to an acceleration heading into the end of the year, the January quarter ramp appears slightly less challenging after the latest report.
Bachman raised FY24 billings growth estimate from 17.0% y/y to 19.3% y/y, and continues to forecast a deceleration in FY25.
The analyst sees SMAR gaining traction with its larger customers.
Bachman thinks self-discovery capabilities and Brandfolder can help revenue growth over the next few quarters, though the analyst expects the upside to remain limited due to pressured deal velocity.
Longer-term, Bachman thinks AI can become a more meaningful growth driver, which management said could start in FY25.
The analyst raised FY24 revenue growth forecast from 17% y/y to 24.1% y/y.
Price Action: SMAR shares are trading higher by 7.11% to $43.23 on the last check Friday.
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