SmartSheet IPO

Jul 11, 2018

Hello lovelies. I hope you had a wonderful 4th of July holiday. Jerremy and I visited some family and traders over the last 5 days. Then my mom and grandparents came up yesterday to visit for the coming week. So much love to be surrounded with. We have about 6 IPO articles under our belt, and we are going for the next personal best. I have chosen SMAR this time :)

SMAR, or Smartsheet Inc, is a software company that is known for it’s SmartSheet application that is responsible for work management and collaboration between users. This includes everything from day to day work tasks such as scheduling, calendars, assigning tasks, and also allows for sharing documents. It is known as one of the ever popular “software as a service” companies or "SaaS". Here’s a quick definition of what that is! “Software as a service is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted.” I bet you can name a few! SMAR was released in 2006 and initially had an abysmally low adoption rate. In the first year, they reported only 10,000 users. This low user rate was attributed to an over complicated interface. Over the next few years the company spent time revamping the software and cut a whopping 60% of it’s features in an attempt to make it easier for the every day person to understand. Which hey, good for them for catching the problem early on and adapting! After the changes and roll out of the new, revamped software in 2010, they grew to 1 million users by the end of 2012. Interestingly enough, I can’t seem to find an actual figure of how many people currently use their software, only a very general “millions of users”.

SmartSheet brings in the dollar bills through it’s subscription model. Remember that SaaS idea we talked about earlier? Come to think of it, have we done any IPO article that DOESN’T use a subscription model. With that being said, in the age of the internet, the subscription model is the ruler of the land! There are three levels (surprise surprise), including individual, business, and enterprise. From what I have gathered, it seems as if a majority of their clients are large businesses as the statistics on their website boast. I would say that SmartSheet is ultra corporate friendly. Their application integrates with countless apps; Literally so many is has a search bar to find them.

Here are just a few!

Let's talk the competition, an almost overwhelming category. When I started looking into competitors, boy did I not know what I was getting into. I had no idea how many Workplace Management companies you have to choose from. However, after brushing my way through the internet with a fine toothed comb, I would say the one company that came up consistently as their most similar competitor was a company called Wrike. Which I must say I am very impressed by. Wrike is giving SmartSheet a run for their money. Not only are they neck in neck for types of products offered, but they offer them for a cheaper price, not to mention they have the ever so wonderful Freemium tier that allows for up to 5 users! That being said though, these two seem to be the cream of the crop in the industry in what is a sea of work management sites. SmartSheet claims they have over 74,000 "brands" using Smartsheet (75,642 domain-based customers), as Wrike says they work with 15,000 companies. Not sure what the vernacular "brands" means but needless to say they are huge. I have no doubt that in the future, Wrike and Smartsheet will continue to push each other's growth. 

Growth which Smartsheet is already seeing. According to their 2019 Q1 financials SMAR's revenue grew first quarter by 63% year-over- year to $36.3 million, broken up as: Subscription revenue, $32.1 million (an increase of 57% year-over-year.) and Professional services revenue, which was $4.3 million, an increase of 129% year-over-year. Upon researching what professional services really "are", I found that this includes things like Consulting Services and Training Certifications. I had no idea that SmartSheet even offered these services. They are truly a full service company as they have the ability to match you with the "people, processes, technology, and strategy" to help your business run better. Plus I am impressed that that part of the business has more than DOUBLED in the last year. Coming from a banking background, most banks have the "ability" to offer this service, but is a mediocre product. Let's be honest, who even goes into a bank anymore. For smaller to mid size businesses, this is a great way to streamline your business, train new employees, all under one roof, eh hem company. Plus, I can only see these types of companies growing just because of the prominence of businesses online.

My analysis on the hourly is pretty simple. Here are the major support and resistance prices. If we zoom out to the daily chart, here is what I see.  It looks like SMAR is likely going to pull back into the $21.61 price range, that previous old resistance and all time high of the 5/10/18 candle. More like when SMAR breaks the low of the 6/25 bullish candle, let's wait on it to creep lower and watch closely for a bullish bounce that might play out something like this. 

Thanks for taking to fun ride with me! If you have any questions please send me an email at ashley@reallifetrading.com! I love getting to talk and interact with you!

- Ashley

"Goodness is about character - integrity, honesty, kindness, generosity, moral courage, and the like. More than anything else, it is about how we treat other people." Dennis Prager