Specialist
Former Manager at Smartsheet Inc
Agenda
- Smartsheet’s (NASDAQ: SMAR) solutions and innovations
- Industry outlook and competitive landscape, highlighting Asana (NASDAQ: ASAN), Monday.com and Wrike (NASDAQ: CTXS) and recent transactional activity
- 1-3-year outlook for Smartsheet
Questions
1.
Could you start by sharing a brief description of Smartsheet? There are numerous companies and businesses in and around the work solutions platform area. How you would characterise Smartsheet’s offering and the value that the company and its solutions provide to customers and users?
2.
Smartsheet provides a breadth of products for customers and users, from core functionality to premium add-ons, as well as pre-built solutions. It seems like pre-built solutions is part of the premium add-ons category. What do those three areas consist of, and how are they differentiated from competing offerings?
3.
To confirm, Smartsheet’s premium add-ons and pre-built solutions essentially cost in addition to the standard rate that customers would pay for the solution?
4.
It’s an interesting strategy to offer premium solutions that cost more to help drive engagement. You’ve framed it as the more specific relevance of the solutions inherently resulting in more interest and activity from the users. I imagine it might also be a harder sell – at least initially – because it’s essentially saying customers will need to pay more for something when they’re just starting off. Could you elaborate on that dynamic and the tensions that I’m discerning are in place in those discussions?
5.
How would you characterise the engagement and popularity of Smartsheet’s premium, additional add-ons vs the core offering? Obviously, it has a freemium model, to some extent, and the company is pushing those premium solutions in part due to a revenue motive, but this also seems to help it fulfil the value prop.
6.
Could you share key examples that showcase why companies use Smartsheet’s platform, the premium add ons and pre-built solutions? The company obviously discusses the core functionality, consisting of everything a team needs to plan, capture, manage, automate and report on work. Then, it seems customers can also capture data, automate workflows and repetitive tasks, or create and share dashboards and reports.
7.
Do you have any further summaries of Smartsheet’s offering? You’ve shared useful examples, given it’s harder to understand what Smartsheet does in a very general sense. As discussed, it seeks to position and sell its products with a more specific use case, and those seem to be the areas in which it delivers value.
8.
What do you think are Smartsheet’s most important categories or solutions? It’s fair to say the company caters to a number of different industries – I counted eight accelerators which tend to be category-specific.
9.
Which verticals were typically more aligned with Smartsheet and its mission, and therefore bigger contributors to overall growth or the revenue mix? You highlighted professional services or M&A as key solutions or use cases – obviously, these aren’t specific to certain industries.
10.
Can you outline Smartsheet’s competitive landscape and its evolution? There seem to be many companies and businesses competing very directly with Smartsheet. Asana went public in October 2020, and some reports indicate Monday.com will seek to IPO in H1 2021. Wrike is in the process of being bought by Citrix Systems. Atlassian, which owns Trello and Jira, is a USD 60bn company. I didn’t even touch on companies such as Microsoft and Alphabet/Google, which are always thought of as being in or related to this area.
11.
What is the impact of Smartsheet being around longer than many peers? You’ve referenced the notion of a licence, which is obviously a complete anachronism for some of these companies. Asana and Monday.com are, I think, fully cloud solutions, which is likely one of the reasons they may be less powerful or customisable. I think one of Smartsheet’s key challenges is that it’s kind of a hybrid solution. It’s steeped in legacy technology, but trying to transition to a current UI, because that’s what a lot of people expect.
12.
Can you elaborate on the cost ramp-up dynamic? Firstly, I’ve referred to Smartsheet as more of a legacy player in this category, but it was founded in 2006, relative to Asana in 2008 and Monday.com in 2012. There’s relatively little difference in their ages. Essentially, you indicated that people buy a licence to Smartsheet and some of the add-ons or customisations, and that’s all part of the package, no matter if it’s a handful of users or thousands. It seems other players have more of a cloud user usage model, and so when you ramp significantly as an enterprise, the costs become not just more significant but perhaps prohibitive.
13.
We’ve discussed how crowded the CWM [collaborative work management] segment is, with a number of well-established participants growing fairly significantly. How regularly will customers move from one company to another? How easy is that transition, given the sheer volume of data information or process workflows? You noted the example where users are coming over from some other vendors because they’re seeking to add many more users. Could you elaborate on this scenario and how often it occurs?
14.
Where is the line of demarcation at which a company might decide a solution is too ingrained in their organisation? Where is that spot, in your experience, relative to going over to Smartsheet or someone else?
15.
It seems there’s a point at which customers realise they may be spending more with Asana or Monday.com when they get to a certain number of users. What might that threshold be, especially based on the pricing that you would offer from Smartsheet vs what others would be paying for those other platforms?
16.
Could you outline Smartsheet’s new customer acquisition? You described this as one of your primary roles, the other being expansion within those client bases. How did the company evaluate the customer types that would align best with the Smartsheet solution, and then identify and pursue those opportunities?
17.
How would you describe Smartsheet’s approach to expansion within enterprises? Obviously, you know a company is a customer or is trialling – what are the strategies to drive product usage and engagement?
18.
How did Smartsheet approach identifying those opportunities internally and then proselytising? Was that in conjunction with sales? Is that a training effort, or finding true believers within the organisation? It seems that Asana and Monday.com have very fervent constituencies within organisations, and I think that actually helps them quite a bit, where they just really love the product and the UX.
19.
We’ve alluded to partnerships being fairly key for Smartsheet. Obviously, it’s been doing this longer than everyone else in this category – it’s developed a lot of relationships and connectivity, playing into the value prop around the power it can bring to users. How differentiated is Smartsheet due to these partnerships?
20.
In Smartsheet’s FY20 – which ended 31 January 2020 – 79% of revenues came from the US. How would you grade the company’s potential to ramp overseas, especially having discussed its relative heritage and strong partner base? What may have impeded international expansion, and how might it resolve any issues?
21.
In Smartsheet’s Q3 FY21, ending 31 October 2020, this domestic revenue contribution had risen to 82%. Do you think Smartsheet should be investing internationally, building out those offices and sales teams and generally intensifying this aspect of its expansion plan?
22.
What is your M&A outlook for Smartsheet and CWM more broadly? I don’t think people were surprised by the acquisition activity in and around this segment, but I don’t know how many expected Citrix to announce its acquisition of Wrike in January. To what extent do you expect further consolidation activity?
23.
Could we conclude with your 1-3-year outlook for Smartsheet? What do you think is the company’s most significant opportunity and its most significant risk?
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