Market Sentiment Around Loss-Making Smartsheet Inc. (NYSE:SMAR)

Simply Wall St ·  Apr 1 08:08

We feel now is a pretty good time to analyse Smartsheet Inc.'s (NYSE:SMAR) business as it appears the company may be on the cusp of a considerable accomplishment. Smartsheet Inc. provides enterprise platform to plan, capture, manage, automate, and report on work for teams and organizations. On 31 January 2024, the US$5.3b market-cap company posted a loss of US$105m for its most recent financial year. Many investors are wondering about the rate at which Smartsheet will turn a profit, with the big question being "when will the company breakeven?" We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Consensus from 21 of the American Software analysts is that Smartsheet is on the verge of breakeven. They expect the company to post a final loss in 2026, before turning a profit of US$24m in 2027. The company is therefore projected to breakeven around 3 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2027? Working backwards from analyst estimates, it turns out that they expect the company to grow 50% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NYSE:SMAR Earnings Per Share Growth April 1st 2024

Underlying developments driving Smartsheet's growth isn't the focus of this broad overview, but, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there's one aspect worth mentioning. Smartsheet currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on Smartsheet, so if you are interested in understanding the company at a deeper level, take a look at Smartsheet's company page on Simply Wall St. We've also compiled a list of important aspects you should further research:

  1. Valuation: What is Smartsheet worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Smartsheet is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Smartsheet's board and the CEO's background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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