Smartsheet Earnings: Robust Enterprise Momentum Supports Revenue and Profitability Beat

We raised our fair value estimate for narrow-moat Smartsheet to $60 per share from $56 following the release of strong first-quarter results, which surpassed our top line and profitability expectations. Smartsheet continues to leverage investments in security, scalability, and compliance features to gain traction in the sticky enterprise market and fend off competitive threats. We believe the skew to enterprise customers with more complex project management needs will drive higher switching costs over time, further supporting the firm’s economic moat. Amid an expanding enterprise footprint, we now factor in more rapid operating leverage over the medium term, driving improved profitability and our raised valuation. Smartsheet shares rallied a sharp 13% in after-hours trading yet remain attractive on a risk-adjusted basis relative to our updated fair value estimate.