Shares of Smartsheet Inc. rose in regular and late trading today after the company reported better-than-expected quarterly earnings results and a report emerged that a private equity consortium was in talks to acquire the management platform company.
For its second quarter ended July 31, Smartsheet reported adjusted earnings per share of 44 cents, up from 16 cents per share in the same quarter of the previous year, on revenue of $276.4 million, up 17%. Both were beats, as analysts had expected earnings per share of 29 cents on revenue of $274.29 million.
Smartsheet had annual recurring revenue of $1.093 billion as of the end of the quarter, up 17% year-over-year. Its customers are also sticking around, as it reported a dollar-based net retention rate of 113%, and the number of customers with annual recurring revenue of $100,000 or more rose 24%, to 2,056.
For its fiscal third quarter, Smartsheet expects adjusted earnings per share of 29 to 31 cents on revenue of $282 million to $285 million, and for the full fiscal year, the company expects adjusted earnings of $1.36 to $1.39 on revenue of $1.116 billion to $1.121 billion.
Those figures might have been enough to drive up Smartsheet’s share price alone, but it was a report from Reuters during the day that gained the most attention — that a consortium that includes Vista Equity Partners Management and The Blackstone Group Inc. is in talks to acquire Smartsheet.
Reports that Smartsheet was discussing a potential buyout with private equity companies first emerged in July, when it was said that the company was working with Qatalyst Partners LP to review the approaches of a number of private equity firms. At the time, it was noted that Smartsheet had not yet made any final decision on whether it should agree to be acquired and that it was possible it could reject offers and remain independent.
Forward nearly two months and people familiar with the matter referenced by Reuters claim that talks between the private equity consortium have progressed as far as terms being discussed and that a deal could be signed in the coming weeks if talks don’t fall apart in the meantime.
Both Vista Equity Partners and Blackstone’s interest in buying tech companies is not new, with both having made acquisitions in the market this year.
Vista Equity acquired JAGGAER Inc., an enterprise procurement and supplier of collaboration software, in August and took a majority stake in data storage software maker Nasuni Corp. in July. Blackstone’s acquisitions this year include Australian data center group AirTrunk Pty. Ltd. for $16 billion earlier this week and public sector software solutions provider Civica Group Ltd. in May.
As of the close of regular trading today, Smartsheet had a market cap of $6.83 billion, with a potential acquisition price likely to be a premium on that figure. While Smartsheet stock is currently trading at a near 12-month high of $49.35, the company’s stock has traded higher in the past, peaking at over $84 per share in 2021.