Why Enterprise Work Management Company Smartsheet Shares Are Down Premarket Today

Smartsheet Inc SMAR shares are trading lower after it reported fourth-quarter FY24 results.

Revenue rose 21% Y/Y to $256.9 million, beating the consensus of $255.4 million.

Subscription revenue increased 23% Y/Y to $244.0 million, while Professional services revenue fell 4% Y/Y to $12.9 million.

Annualized recurring revenue grew 21% Y/Y to $1.031 billion, and calculated billings rose 20% Y/Y to $1.069 billion.

Number of all customers with ARR of $100,000 or more was 1,904, up 28% Y/Y.

Non-GAAP operating income rose to $39.6 million from $7.5 million the prior year quarter. Non-GAAP EPS of $0.34 beat the consensus of $0.18.

Net operating cash flow stood at $59.7 million (vs. $20.2 million a year ago), and free cash flow was $56.3 million in the quarter. As of January 31, 2024, cash and cash equivalent of $282.1 million.

Outlook: For first-quarter, the company expects revenue of $257 million-$259 million (up 17% to 18% Y/Y) vs. consensus of $263.61 million, adjusted operating income of $32 million-$34 million, and adjusted EPS of $0.26-$0.27 (vs. consensus of $0.20).

For FY25, Smartsheet projects revenue of $1.113 billion-$1.118 billion (vs. consensus of $1.144 billion), adjusted operating income of $135 million-$145 million, and adjusted EPS of $1.06-$1.13 (vs. street view of $0.94).

Apart from this, the company disclosed a series of strategic changes to its executive team as the company enters its post–$1 billion annualized recurring revenue (ARR) growth phase.

The company disclosed key changes to its executive leadership team focused on refining and expanding the strategy that underpins its Go-to-Market (GTM) and Product & Innovation efforts.

Price Action: SMAR shares are down 10.67% at $36.00 premarket on the last check Friday.