5 Interesting Learnings from SmartSheet at $400,000,000 in ARR

We’ve done a lot of fun sessions together with Smartsheet over the years at SaaStr but haven’t taken a deep dive into its business.  It’s an interesting one, with a very broad base of SMBs and a slow-and-steady path to going upmarket.  They are now growing a stunning 42% year-over-year at over $400,000,000 in ARR!!

Founded way back in 2006, adoption was slow at first, but they kept at it and Smartsheet is now growing faster than ever 15+ years later.

Let’s take a look at 5 Interesting Things:

#1.  Very High NRR from SMBs.  Smartsheet has a very impressive 123% NRR from SMBs.  They also nicely segment NRR by deal size, so you can see it grows to 140% from their largest enterprise customers.

NRR has come down a bit over time, from 135% pre-Covid to 123% today (as you can see below), but in any event, is world-class for SMBs.

#2.  Driving deal size up accounts for a lot of growth.  Smartsheet has aggressively driven its ACV up from $3,643 in 2020 to $5,103 today. That’s a lot — 40% higher average deals.  This just about equals their ARR growth.

#3.  90% of customers pay annually — even SMBs.  This is an interesting contrast to Zoom, which has seen its monthly invoicing grow to 50% of its $4B+ in ARR.  It just shows perhaps there is no standard answer to how often SMBs should pay.

#4.  The biggest customers are fueling the most growth.  Smartsheet, like PagerDuty, Asana, and a few others in this series waited a while to go “more enterprise”, but then leaned in.  At IPO, Smartsheet was all about SMBs.  Today, its fastest-growing customers are $100k+ deals:

#5. A big bet on $500k+ deals.  Smartsheet’s next push is $500k+ deals at 10,000+ employee customers.  The overall productivity space has plenty of room here, but it’s a different pace and feature set and it will be interesting to watch Smartsheet’s progress on the way to $1B in ARR.

What a great story!  A patient run over a decade to $100m ARR and then IPO, and then a push into bigger deals at $150m+ ARR, and then deeper into the enterprise at $400m-$500m ARR and beyond.

Published on March 19, 2021

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