In December we used our text analytics platform to highlight Smartsheet (SMAR) as our top pick for 2019. Smartsheet has not disappointed, so we revisit our pick and review their latest earnings sentiment to determine if Smartsheet can close out the year atop the Technology sector.
On December 4th we highlighted improving trends that our NLP model identified in Smartsheet (SMAR, $4.5B market cap). Ahead of next week’s Q4 earnings call, we used our text analytics platform to track recent data points from software peers, and found evidence of a continued strong demand environment, particularly in the U.S. mid-market, which is the sweet spot for Smartsheet.
However, since our last note SMAR shares have gained 60% vs just 5% for the Russell 2000, suggesting this once-hidden gem has found the spotlight.
Excerpts below are from our December 4th article:
The average Amenity Score of Software earnings calls this quarter has been 45, up one point from last quarter, and well above the market average of ~20. Recent comments below indicate broad-based demand strength, particularly in the U.S. mid-market. On the risk side Box called out weakness in large deals in Europe, which is consistent with broader macro weakness in the region. However, Smartsheet derives less than 15% of its revenue from Europe and considers a $50,000 ARR to be a large customer, a far cry from Box’s 7-figure lumpiness:
Coupa Software (3/11/19):
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