William Blair: SaaS Platform Smartsheet Has $11.5B Market, Potential For 40% Revenue Growth

Smartsheet Inc (NYSE: SMAR), a SaaS workflow platform, recently offered 11.63 million shares in an IPO at $15 each. The sell-side is starting coverage of the company now that its IPO quiet period is expiring. 

The Analyst

William Blair analyst Bhavan Suri initiated coverage of Smartsheet with an Outperform rating.

The Thesis

Smartsheet is a leader in collaborative work management that allows users with no coding or development knowledge to incorporate automation in work and break down information barriers within teams, Suri said in a Tuesday note.

The company boasts over 92,000 customers, including 90 of the Fortune 100 and two-thirds of Fortune 500 companies, the analyst said. Net dollar retention rates at the end of fiscal 2018 were a strong 130 percent across all customers, and 149 percent for customers with annual recurring revenue above $5,000, he said. 

Smartsheet's total addressable market stands at $11.5 billion, with $830 million in Fortune 500 companies, Suri said. The $111 million in revenue Smartsheet earned in fiscal 2019 offers scope for further market penetration, the analyst said. 

William Blair forecast multiple growth drivers for Smartsheet, including expansion among existing customers, international expansion in Europe and new customer acquisition, which should sustain revenue growth above 40 percent for the next couple of years, in the sell-side firm's view. 

The Price Action

Smartsheet shares closed their debut session April 27 with 30-percent from the offer price.

The stock has added about 2.7 percent since its listing. 

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Photo courtesy of Smartsheet.