Smartsheet Inc – February 2, 2023

With the corporate world operating under a new paradigm of remote teams and working from home, tracking projects and performance, all while trying to collaborate and stay aligned on tasks and goals, have become more important and challenging than ever.

Smartsheet’s cloud-based work management and collaboration platform help keep companies on track with a comprehensive solution that allows users to create, share, and manage tasks, projects, and workflows, all in a centralized location. Offering features such as real-time collaboration, Gantt charts, and data visualization tools it aims to provide visibility and accountability, as well as mitigate the issues that often result in delays and lack of productivity.

Used by businesses of all sizes across a variety of industries, including everything from construction to finance, healthcare, and technology, Smartsheet offers a rich set of views, workflows, reports, and dashboards to capture and track plans, resources, and schedules, while automation functions assist with repetitive tasks and workflows to not only save time, but reduce the risk of errors.

Also offering extensive integration with other systems, the platform ultimately helps organizations to improve their work processes, increase productivity and efficiency, and make better-informed decisions.

With the goal of making its platform accessible for every organization, Smartsheet is relentlessly focused on growth as it aims to attract more customers, expand across geographies, and further build out its product features and functionality.

Founded in 2005 by three former executives from Boeing, including current CEO Mark Mader, Smartsheet began as a provider of project management software for small businesses. While initial growth was slow due to usability issues, changes to the software in 2008 saw user numbers explode from just 10,000 at the end of its first year to more than 1 million across 20,000 organizations by 2012.

Product offerings such as additional collaboration and automation features soon expanded as it started to also develop integrations with other enterprise software companies such as Salesforce and Microsoft. The company also began to expand internationally, opening offices in Canada and the UK.

In 2017, Smartsheet went public, raising $150 million in its IPO. Since then, it has continued to grow and expand, adding new integrations and also making acquisitions along the way, including Una and EasyVista, to enhance its enterprise-grade capabilities. While in 2021 it released a new AI-driven feature, which uses machine learning to predict and prevent delays in workflows.

Co-founder, Mark Mader remains with Smartsheet in the role of chief executive officer. Mader has over two decades of leadership experience driving innovation for high-growth SaaS companies and is a recognized leader in the technology community. In addition to the company’s huge growth, expansion of offerings and partnerships, and its going public, under his leadership, Smartsheet was named Washington’s Best Workplace by the Puget Sound Business Journal, and Seattle’s Next Tech Titan by GeekWire. He has also been named GeekWire’s CEO of the Year.

Joining Mader is Stephen Branstetter as the company’s chief operating officer, responsible for driving ongoing growth and operational excellence. In his eight years with Smartsheet, he has established multiple functions across the company including Professional Services, Customer Success, and Support, along with providing leadership within Partner Sales and Sales Enablement.

Smartsheet’s platform helps customers automate processes across their organization, saving time, and minimizing the risk of errors. It allows users to organize their unstructured work and apply business logic to automate repetitive tasks and workflows such as update requests and approvals, all without the need to write code. The platform allows teams to work together on tasks and projects in real-time, regardless of their location, improving communication and coordination between team members to increase productivity and efficiency, and enable more informed and faster decision-making. Additionally, it enables content collaboration across teams, producing better content faster.

Tools for creating and managing tasks and projects, including Gantt charts and task dependencies, help teams to stay organized and on track, and make it easier to identify and resolve any issues that may arise. While a range of data visualization functions, including charts and dashboards, help users easily understand and communicate project progress and performance. It also affords multiple levels of integration with other systems, such as Salesforce, Adobe, and Microsoft, amongst many others, to further increase the value of existing applications.

The platform is offered in several packages to meet the needs of varying customers looking to manage their programs and projects, scaling from individual users looking to track their own work to large deployments of over 10,000 licensed users and hundreds of thousands of free collaborators. The software’s ease of use allows it to be adopted by a wide range of users and organizations, and thanks to enterprise-level features such as scalability, compliance, and security, it is widely used in large organizations. Customers can begin using Smartsheet within minutes and configure the platform for their needs with limited or no training. As a result, the platform now has 10 million users.

Smartsheet is aiming to make its platform accessible for every organization, team, and worker relying on collaborative work. Consequently, it has several strategies in place that aim to attract more customers, grow its existing customer base, and expand internationally and more into the public sector. Core to achieving this will involve expanding product features and functionality, making additional investments in partnerships and integrations, and continuing to pursue strategic acquisitions.

With such a broad global need for a work execution platform such as Smartsheet, the company believes there is a significant opportunity to further grow its paid user base with new customers. It is investing heavily in its digital sales model, direct sales force, and marketing in order to land new customers and increase enterprise adoption. Additionally, the company has a professional services function to develop new and enhanced premium solutions and standalone offerings to help land larger accounts and increase the scale of deployments with customers.

Smartsheet also works with existing customers to help them define new use cases within existing deployments, to ultimately expand the usage of the platform to additional teams within their organizations. And with less than approximately 20% of its revenue from customers outside the U.S., there is a significant opportunity to acquire new and boost usage with existing clients internationally. Accordingly, Smartsheet is expanding its sales force focused outside of the U.S., establishing international sales territories, and partnering with strategic resellers.

The Smartsheet Gov platform is now fully approved for use by federal agencies and government contractors. Leveraging this status, Smartsheet can be found on the AWS Gov Cloud Marketplace, which lists authorized organizations to help agencies select secure and compliant cloud providers available for federal use. Furthermore, the platform has also obtained the necessary approvals to secure cloud computing engagements with the U.S. Department of Defense.

Smartsheet intends to continually increase the value it provides to its customers by investing in extending the capabilities of its platform, particularly with continued emphasis on enterprise management features, including account administration, security, and permissioning in order to secure larger clients. Additional investments in partnerships and integrations will seek to boost its extensive embedded functionality which complements and enhances the use of the most common productivity tools from providers such as Microsoft, Google, Slack, and Dropbox, along with new partners that will increase the value, awareness, and adoption of the platform.

Likewise, appropriate strategic acquisitions that are complementary to Smartsheet’s offering will continue to be sought out. Most recently, the company has made several acquisitions including Brandfolder and 10,000ft, which now provide a solution for digital assets to manage workflows around content and collaboration, along with a resource planning software solution.

Smartsheet has been on an impressive trajectory of revenue expansion, achieving year-over-year growth of between 40% and 65% for the last six years in a row. That run has continued in FY23 as subscription revenue exceeded half a billion dollars and increased by $153.2 million, or 42%, for the first nine months of the financial year. The continued surge was driven by an increase in sales of user-based subscription plans, followed by an increase in sales of pre-configured capabilities, along with higher professional services revenue due to demand for consulting and training services.

While gross margins for subscription revenue have dropped marginally from 85% to 84% due to an increase in employee-related expenses and hosting fees that outpaced the related increase in subscription revenue, the company maintains a healthy gross profit. In light of heavy investment into ongoing growth the company continues to operate at a net loss, however, earnings per share have been gradually improving since 2020.

Looking ahead, management is forecasting to close out FY23 with total revenue of $760 million to $762 million, representing year-over-year growth of 38%, matching consensus expectations. Analysts are also expecting full-year earnings per share to record a loss of $0.31 for FY23, representing a contraction of 9%, however, a strong improvement to a loss of only $0.06 per share is expected for FY24.

The market for work execution software is fragmented, increasingly competitive, and subject to rapidly changing technology and evolving standards. Smartsheet faces competition from several major vendors with a variety of product offerings. Its competitors range in size, from diversified global companies with significant resources like Asana, Trello, Microsoft, and Monday.com, to smaller start-ups building on new technology platforms whose narrower offerings may allow them to fulfill targeted niches. While the company currently collaborates with Google and Microsoft, they may develop and introduce, or acquire, products that ultimately compete with the Smartsheet platform.

With primary competition remaining a combination of manual, email- and spreadsheet-based processes from providers that users have historically relied on to manage work such as Google and Microsoft, Smartsheet believes it is positioned favorably given its enterprise-grade capabilities, focus on business user empowerment, and ability to support critical workflows at scale.

Smartsheet’s simple and intuitive platform for creating, sharing, and managing collaborative workflows and projects, coupled with extensive popular integrations, and versatility amongst businesses of all sizes and industries, have made it a standout choice for corporate toolsets. The company’s efforts to expand its product offerings and partnerships to drive growth and increase its market share are giving it a compelling runway for future success.