On Friday, KeyBanc Capital Markets maintained its Sector Weight rating on Smartsheet Inc . (NYSE: NYSE:SMAR) while addressing recent acquisition discussions. The analyst noted that the company's recent quarter was solid, and the changes in pricing and packaging are progressing as management anticipated. Despite a slight increase in customer churn at the lower end and some services revenue shifting to third-party providers, the analyst found no major concerns.
The commentary further highlighted that Smartsheet is reportedly in negotiations to be acquired by a private equity group, following earlier reports from July of inbound interest. KeyBanc had previously identified Smartsheet as a potential private equity buyout target in its "Sharks and Minnows" report.
The analyst believes that Smartsheet could be a valuable asset for a private equity firm due to its expanded margin profile and potential for financial leverage.
Although the firm does not have a set price target for Smartsheet, the analyst's updated discounted cash flow (DCF) analysis suggests a fair value of around $50 per share. The analyst emphasized that, given the company's financial characteristics, it could command a higher value in the context of a private equity transaction.
In other recent news, Smartsheet Inc. has released its financial results for the second quarter of fiscal year 2025, showcasing a 17% year-over-year growth in revenue, which amounted to $276.4 million.
The company's annualized recurring revenue also saw a 17% increase, reaching $1.093 billion. Smartsheet has introduced a new pricing model, which has garnered high engagement and thousands of new transactions.
The company now has 77 customers with an annualized recurring revenue of over $1 million, a 50% increase from the previous year. Smartsheet has updated its FY 2025 guidance, expecting revenue between $1.116 billion and $1.121 billion and a free cash flow increase to $240 million.
Despite a slight uptick in churn among smaller customers, Smartsheet is maintaining its revenue guidance for FY 2025, predicting a 16% to 17% increase. The company's Q3 revenue guidance is between $282 million to $285 million, with non-GAAP operating income of $42 million to $44 million.
InvestingPro Insights
As Smartsheet Inc. (NYSE: SMAR) captures the attention of both analysts and potential private equity investors, a closer look at the company's financial health and market performance can offer additional insights. According to InvestingPro data, Smartsheet has a market capitalization of approximately $7.25 billion, reflecting its significant presence in the market. The company boasts an impressive gross profit margin of 81.61% for the last twelve months as of Q2 2025, underlining its ability to maintain profitability at the operational level. Moreover, revenue growth remains robust, with an increase of 20.16% over the same period, indicating a solid expansion trajectory.
InvestingPro Tips suggest that Smartsheet holds more cash than debt on its balance sheet, which is a strong indicator of financial stability and may be a key factor in attracting buyout interest. Additionally, analysts predict the company will be profitable this year, providing further optimism for potential investors. It's worth noting that Smartsheet is trading near its 52-week high, with the price at 96.2% of this peak, and the stock generally trades with low price volatility, which could be appealing for those looking for stable investment opportunities.
For readers interested in a deeper dive into Smartsheet's financials and potential as an investment, InvestingPro offers a comprehensive list of tips, with 8 additional insights available at https://www.investing.com/pro/SMAR. These tips could be particularly valuable for understanding the nuances of Smartsheet's financial position and market performance, especially in the context of the ongoing acquisition discussions.
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