Samsara : Q3 Fiscal Year 2025 Financial Results Shareholder Letter

Published: 2024-12-05 23:07:03 ET IOT

Shareholder Letter

Q3 FY25 | December 5th, 2024

Legal Disclaimer

This shareholder letter contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements may relate to, but are not limited to, expectations of future operating results or fnancial performance, market size and growth, industry developments and trends, the calculation of certain of our fnancial and operating metrics, capital expenditures, future payroll tax obligations, plans for future operations, including expansion into new geographies and products, headcount and productivity growth, macroeconomic conditions, competitive position, technological capabilities, including AI, inventory capacity and supply chain conditions, customer adoption of and expected results from our Connected Operations® Cloud, including cost-savings and return on investment, and strategic relationships, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantifed and could cause actual results and events to differ. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "intend," "potential," "would," "continue," "ongoing", "guidance" or the negative of these terms or other comparable terminology. You should not put undue reliance on any forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Forward-looking statements are based on information available at the time those statements are made, including information furnished to us by third parties that we have not independently verifed, and/or management's good faith beliefs and assumptions as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. In light of these risks and uncertainties, the future events and circumstances discussed in this shareholder letter may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. These risks and uncertainties include our ability to retain customers and expand the Applications used by our customers, our ability to attract new customers, our future fnancial performance, including trends in revenue and annual recurring revenue ("ARR"), annual contract value ("ACV"), net retention rate, costs of revenue, gross proft or gross margin, operating expenses, customer counts, non-GAAP fnancial measures (such as adjusted revenue, adjusted revenue growth rate, non-GAAP gross margin, non-GAAP operating margin, free cash fow, adjusted free cash fow, and adjusted free cash fow margin), our ability to achieve or maintain proftability, the demand for our products or for solutions for connected operations in general, the Russia-Ukraine confict, geopolitical tensions involving China, the confict in the Middle East, the emergence of public health crises, the results of the recent presidential election and congressional elections in the United States, and other macroeconomic conditions globally on our and our customers', partners' and suppliers' operations and future fnancial performance, possible harm caused by silicon component shortages and other supply chain constraints, the length of our sales cycles, possible harm caused by a security breach or other incident affecting our or our customers' assets or data, our ability to compete successfully in competitive markets, our ability to respond to rapid technological changes, and our ability to continue to innovate and develop new Applications. The forward-looking statements contained in this shareholder letter are also subject to other risks and uncertainties, including those more fully described in our flings and reports that we may fle from time to time with the Securities and Exchange Commission, including our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Except as required by law, we do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

This letter contains statistical data, estimates and forecasts that are based on publicly available information or information and data furnished to us by third parties such as our customers, as well as other information based on our internal sources. While we believe the information and data included in this letter are based on reasonable assumptions, this information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verifed the accuracy or completeness of the information and data provided by third parties and other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of that data nor do we undertake to update such data after the date that this letter is frst released.

The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the platform and products of Samsara.

This letter also includes certain non-GAAP fnancial measures. Reconciliations between our GAAP and non-GAAP fnancial measures, as well as important information about our use of non-GAAP fnancial results and non-GAAP fnancial guidance for future quarters, can be found in our investor presentation and/or earnings press release, both of which are available on our investor relations website. A reconciliation of non-GAAP guidance fnancial measures to corresponding GAAP guidance fnancial measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty and potential variability of expenses, such as stock-based compensation expense-related charges and timing of capital expenditures, that may be incurred in the future and cannot be reasonably determined or predicted at this time. It is important to note that these factors could be material to our results of operations computed in accordance with GAAP.

Q3 FY25 | 1

Sanjit Biswas

Chief Executive Officer and Co-Founder

Samsara achieved another strong quarter of durable and efcient growth. We ended Q3 with $1.35B in ARR, growing 35% year-over-year. We also delivered a quarterly record 10% adjusted free cash fow margin. Our growth is powered by our deep partnerships with the world's largest and most complex operations organizations. We added 170 customers with more than $100K in ARR, our second highest quarterly additions ever. This includes major customer wins with large organizations including Papa Johns, the world's third largest pizza delivery company with more than 5,900 restaurants in approximately 50 countries and territories, a Fortune 500 American multinational company specializing in confectionery, food, and beverages, and a Fortune 1000 network of full-service medical equipment companies.

As we continue to grow, we are excited about the innovation that we're unlocking with more scale. This includes:

To continue scaling our customer base we're investing in the following priorities:

Q3 FY25 | 2

PARTNERING WITH OUR CUSTOMERS TO DELIVER ROI

Our customers provide the mission-critical infrastructure that keeps the world running. They represent industries that make up more than 40% of global GDP, including construction, feld services, utilities, and transportation and logistics. They have complex operations that are asset-heavy and labor-intensive with tens of thousands of frontline workers and expensive assets.

We are partnering with our customers to digitally transform their organizations. Our growing data asset feeds our AI-powered platform that gives our customers insights so they can improve their operations. This translates to clear and fast ROI with payback periods often measured in months. Typical savings include lower insurance premiums and payouts, improved fuel efciency, lower maintenance costs, better utilization of assets, and improved worker hiring and retention. As our customers achieve ROI, they often expand with us for even more savings.

Return on Investment statistic from IDC Business Value White Paper, sponsored by Samsara, The Business Value of Samsara, IDC #US52102724, and published June 2024

Customer Spotlight: Comfort Systems

A good example of a customer expansion in Q3 is Comfort Systems. Comfort Systems is a Fortune 1000 company that provides commercial, industrial and institutional heating, ventilation, air conditioning, and electrical contracting services. Their operations span over 170 locations with over 40 operating units and over 18,000 employees. Comfort Systems prioritizes safety as a core value and is committed to a zero-harm work environment. With Samsara, they achieved an 85% reduction in vehicle safety events and a 72% reduction in speeding in just six months. They are now a top 25 customer and have had nine expansions with us since becoming a customer in 2022. In Q3, they added Asset Tags and expanded with more of Samsara's Safety, Telematics, and Equipment Monitoring. They're using Asset Tags to track high value, smaller equipment on job sites like scissor lifts, welders, and pipe machines and to improve their asset utilization.

Q3 FY25 | 3

Customer Spotlight: Fortune 500 Water, Hygiene, & Infection Prevention Services Company

In Q3, we also had a $1M+ expansion with a Fortune 500 global company that provides water, hygiene, and infection prevention solutions and services. They have 48,000 employees and a large feet of 11,000 light-duty vehicles to support nearly 3 million customer locations worldwide. They became a Samsara customer in 2021 and they have had 11 expansions with us. They are using our Safety and Telematics products across two of their divisions, and there are additional expansion opportunities in fve more divisions. With Samsara, they have decreased harsh driving events by 37% using Samsara AI dash cams and in-cab coaching. In a pilot this year, they also reduced severe speeding by 48% and decreased forward collision warning events by 50% with in-cab alerts.

Q3 FY25 | 4

BRINGING AI TO PHYSICAL OPERATIONS

We are excited by the impact that AI is having on the safety, efciency, and sustainability of our customers' operations. We recently surveyed over 1,500 leaders in physical operations across 21 industries and seven countries in our 2024 State of Connected Operations Report. We found that AI-driven advancements are fundamentally reshaping how these organizations operate. These leaders are experiencing the benefts of AI and 87% reported that they are planning to increase AI investments in the coming year. Among the top reported benefts of AI adoption, 45% cited improvements in safety, 45% highlighted enhanced data and analytics capabilities, and 43% reported gains in operational efciency. These fndings show the powerful role AI will play in the future of connected operations.

Statistics from SamsaraState of Connected Operations Report

Q3 FY25 | 5

Introducing Samsara Intelligence

Earlier this week, we announced our newest AI innovations to support our customers' needs. We introduced Samsara Intelligence, an expanded suite of AI offerings, which helps teams make smarter decisions and run safer, more efcient operations. This includes:

Samsara Intelligence is trained on our expansive data set, which we have built through years of supporting the world's largest and most complex operations. We now process more than 10 trillion data points and 70 billion miles driven annually. In addition to scale, our dataset also has incredible breadth. It spans a broad and diverse group of asset types, end markets, data types, geographies, and customer sizes. Our customers face tough challenges and our AI models use this data to help them solve real-world use cases.

Q3 FY25 | 6

Samsara Assistant is an interactive generative AI tool that helps operations teams save time by providing immediate answers to a wide range of questions they encounter every day.

Some examples include:

Q3 FY25 | 7

Intelligent Experiences embeds AI insights, recommendations, and actions throughout the Samsara platform. It uses multi-modal intelligence, including data across video, text, sensor, and diagnostics to make AI accessible for the frontline. Specifc visual, training, and coaching intelligence offerings include:

Samsara Assistant and Intelligent Experiences are now available in beta to customers in North America and will be generally available after running our customer feedback loop. We're excited to see many of our initial customers already achieving signifcant impact from the new AI products. Over the next couple of months, we are focused on improving the core use cases that drive the highest ROI.

Q3 FY25 | 8

INVESTING IN INTERNATIONAL FOR THE LONG-TERM

I've met with dozens of customers in our international markets this year. Every time I meet with them, I'm inspired by the long-term opportunity to expand our impact.

Customer Conferences: Go Beyond & Innovation Day

In November, we hosted two international customer events - Go Beyond, our inaugural European customer conference, and Innovation Day in Mexico. We brought together hundreds of local customers at each event to discuss how data and AI are impacting the world of connected operations. We also announced several new product features tailored for customers in these local markets.

At Go Beyond in Europe, we announced two new features: Low Bridge Strikes and Electronic Braking Performance Monitoring System (EBPMS). Low Bridge Strikes uses AI to help our customers minimize the risk of trucks with tall trailers hitting the underside of low bridges that are common in Europe. Customers set the maximum vehicle height and drivers are alerted whenever they approach a bridge that is too low to pass. Nearly 2,000 bridge strikes happen in the UK every year, costing UK taxpayers around £23 million a year. We also introduced EBPMS to help our customers maintain their braking performance record and alert feet operators when braking performance falls below acceptable standards or if it detects faults. We expect that in 2025, EBPMS will become one of the two accepted methods for brake testing in the UK.

At Innovation Day in Mexico, we announced the Engine Immobilizer 2.0 feature. Physical security is a top priority for our Mexican customers, and this feature allows new customizable alerts to meet operators' needs when their safety is compromised. It also provides detailed real-time reports through the Samsara dashboard, helping customers effectively monitor the safety of their vehicles.

Q3 FY25 | 9

Disclaimer

Samsara Inc. published this content on December 05, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on December 06, 2024 at 04:06:06.169.