Samsara Inc – March 23, 2023

While data-driven markets have historically been quicker to adopt Internet of Things solutions to drive decision-making and improve operational efficiency, physical enterprises are increasingly recognizing the potential benefits of IoT in improving efficiency, reducing costs, and enhancing safety.

Samsara Inc is pioneering this advance with its Connected Operations Cloud, which leverages IoT data from various physical devices and third-party systems to provide businesses with actionable insights and improved operations. Offering a range of applications, including video-based safety, vehicle telematics, apps and driver workflows, equipment monitoring, and site visibility, these applications leverage AI-powered data platforms to provide real-time visibility, analytics, and insights for customers’ physical operations.

The platform captures 1.6 trillion data points of previously siloed information annually, which powers the company’s AI models, making it easier for organizations to access and act on the insights using cloud dashboards, alerts, and reports. As a result, industries across everything from transportation and construction to logistics and utilities can benefit from significant reductions in safety event rates, fuel savings, improved compliance, and reduced insurance premiums, amongst much more, ultimately driving superior safety, efficiency, and sustainability.

Samsara’s focus on innovation and integration with third-party enterprise software systems such as Salesforce, Microsoft, and enterprise resource planning systems has led to rapid customer adoption. Continuing this strong growth stage, the company is focusing on further expanding its customer base both domestically and internationally, broadening its footprint with new offices around the globe, as it aims to take advantage of a rapidly digitizing market. The company also sees a significant opportunity to expand application adoption amongst existing clients, as it enhances its product offerings and adds new data types to the platform, ultimately facilitating opportunities in new use cases, such as IoT developer platforms, manufacturing, agriculture, and smart cities.

Founded in 2015 by Sanjit Biswas and John Bicket, Samsara has emerged as a cutting-edge IoT platform provider focused on connected operations. Biswas and Bicket, both successful entrepreneurs, had previously co-founded Meraki, a cloud-managed networking company that was acquired by Cisco for $1.2 billion in 2012. Drawing from their experience in cloud networking, they set out to develop a comprehensive suite of hardware, software, and cloud solutions that would transform the way organizations manage their physical operations.

In its initial stages, Samsara focused on providing IoT sensors and telematics solutions for commercial fleets, enabling real-time visibility and analytics for vehicle tracking and fuel efficiency. The early success of these products allowed the company to raise enough funding to expand its product portfolio to include video-based safety solutions, which leveraged AI and computer vision technologies to improve driver safety and reduce accident rates. Over the next few years, Samsara’s growth accelerated, driven by robust customer demand and an expanding product line up to encompass asset monitoring, site visibility, and cold chain monitoring solutions, as well as enhance its core fleet management and telematics products.

In addition to organic growth, Samsara has also pursued strategic acquisitions to strengthen its product capabilities and market reach. Notable additions include AgTech IoT start-up AgriSens and industrial computer vision start-up Helios Technologies, which have enabled the company to enhance its AI-driven analytics and computer vision capabilities, as well as expand its footprint in the agriculture and industrial sectors.

Co-founder Sanjit Biswas, continues as Samsara’s chief executive officer, having led the company since its inception in 2015. Under his guidance, Samsara has grown into a major player in the IoT and connected operations space, serving a wide range of industries and customers. With a strong background in cloud networking and his previous success with Meraki, Biswas has played a pivotal role in shaping Samsara’s vision, product strategy, and overall growth.

John Bicket also continues to shape Samsara as chief technology officer, having been responsible for the company’s technology strategy and innovation since the beginning. Bicket’s expertise in networking, IoT, and cloud technologies has been instrumental in the development and expansion of Samsara’s product portfolio, including its industry-leading fleet management, telematics, and computer vision solutions.

Samsara serves a wide range of industries as the comprehensive suite of applications and hardware devices provides private and government customers with a “single pane of glass” for not only managing their entire physical operations, but achieving significant efficiencies as a result.

The company’s video-based safety solution provides businesses with visibility into their fleet operations, allowing them to analyze and archive footage from IoT dash cameras. This information helps reconstruct incidents, exonerate drivers, and reduce costs by refuting fraudulent claims. The integration of AI-based computer vision technology further enables real-time detection of risky driving behaviors for immediate driver coaching and improved safety. Consequently, businesses can achieve material reductions in insurance premiums and improvements in driver performance.

Vehicle telematics encompasses real-time GPS tracking, routing and dispatch, reporting and alerts, maintenance, and fuel management, so that customers can manage their fleet operations with ease, improving on-time arrivals and end-customer satisfaction. Additionally, the suite’s maintenance and fuel management tools help minimize equipment downtime, lower costs, and reduce fuel consumption by identifying wasteful driver behaviors. Samsara’s EV suite further supports businesses in transitions to electric fleets, providing real-time charging station status and alerts, route planning, and usage reporting.

A driver workflow application simplifies daily tasks and compliance procedures for drivers, improving productivity and reducing manual errors, while electronic document capture eliminates paper-based processes, streamlining back-office administration and facilitating more efficient claims investigation. An Electronic Logging Device, registered with the Federal Motor Carrier Safety Administration, simplifies Hours of Service compliance and reduces the costs associated with meeting stringent regulations.

Through real-time location tracking and utilization reporting, Samsara’s equipment monitoring solution allows customers to manage a wide range of assets, from heavy construction equipment to unpowered property like dumpsters and storage containers. The platform’s maintenance features help businesses improve equipment maintenance schedules based on usage and health data, preventing unplanned downtime. Moreover, the solution supports customers with refrigerated trailers by offering real-time temperature monitoring and remote refrigeration control.

While Samsara’s site visibility application uses advanced AI and cloud-based monitoring to transform traditional IP security camera systems. Customers can leverage AI detection to identify workplace hazards and operational inefficiencies, while proactive alerts enable rapid response to unusual activity. The mobile app provides real-time remote visibility across all connected sites, facilitating efficient incident investigation.

With streamlined data management, increased safety, reduced costs, enhanced operational efficiency, improved sustainability, and more efficient regulatory compliance, Samsara solutions offer numerous and lucrative benefits to customers.

The global IoT market is expected to expand at a significant rate, driven by the need for greater efficiency, improved safety, and cost reductions across various industries. Additionally, the growing focus on sustainability and the increasing adoption of electric vehicles present tremendous opportunities for Samsara to deliver value to its customers.

In its latest shareholder letter reflecting on FY23, Samsara said it sees digitizing the world of physical operations as a multi-decade journey. Therefore, it is currently focused on balancing growth and profitability. It is targeting a “Rule of 40” defined as reaching a sum of year-over-year revenue growth and adjusted free cash flow margin, consistently, of at least 40%. While also maintaining investment in research and development to continue enhancing its product offerings and ensure that it remains at the forefront of the IoT industry.

Samsara’s growth strategies are currently centered around attracting new customers, expanding its existing customer base, and exploring international and public sector opportunities. To that end, Samsara is investing heavily in its digital sales model, direct sales force, and marketing efforts. The company also leverages its professional services function to develop premium solutions and standalone offerings, helping to secure larger accounts and scale deployments with existing customers. Samsara also works closely with its current clients to identify new use cases and expand the usage of its platform within their organizations, allowing them to upsell additional services and increase customer lifetime value.

With a significant portion of its revenue generated within the U.S., Samsara sees a massive opportunity to grow its international customer base. The company is actively expanding its sales force focused outside of the U.S., establishing international sales territories, and partnering with strategic resellers to reach global markets.

By providing solutions that comply with strict regulations and security requirements, Samsara is aiming to unlock new growth opportunities in the lucrative public sector market, leveraging its IoT solutions to address unique challenges faced by government agencies and contractors. In its latest quarter, Samsara saw significant traction in this space as it added its first State Department of Transportation to an existing public sector account, which now exceeds $1 million in annual recurring revenue.

Building on its existing suite of products that deliver real-world benefits and efficiencies, Samsara’s approach to product development focuses on creating applications that deliver valuable operational insights and drive tangible results for customers. While the company’s AI-powered data platform is the foundation for its extensive suite of applications, Samsara understands the importance of strategic partnerships and acquisitions in driving growth and enhancing its product offerings. Consequently, it actively seeks opportunities to collaborate with leading technology providers and invests in integrations with popular productivity tools such as Microsoft, Google, Slack, and others. This approach not only increases the value and adoption of Samsara’s platform but also raises brand awareness among potential customers.

Since going public in 2021, Samsara has maintained impressive top-line growth culminating with $652.5 million in revenue for FY23 after delivering a year-over-year improvement of 52%. While its frequently reported metric of annual recurring revenue rose 42% to $795 million. The result came as it had a strong period of large deals with customers who have complex operations at scale and a wide breadth of assets, such as cranes, tractors, vehicles, and buildings. These additions resulted in over 430 large new customers with more than $100K in ARR, taking the company’s total number of large customers to over 1,200.

In addition to delivering top-line growth, the company’s continuing focus on driving operating efficiency improvements across the business as it scales, saw year-over-year leverage improvements across all major functions. Gross margins improved one percentage point to 73% in FY23 driven primarily by cellular and cloud cost optimization due to larger scale.

Looking ahead, management has set guidance for FY24 at total revenue of $838 million to $848 million, representing year-over-year growth of 30%, matching consensus expectations. Analysts are expecting full-year earnings per share to record a loss of just $0.07 for FY24, representing a strong improvement of 49% from a loss of $0.13 per share in FY23.

While the market for IoT solutions is highly competitive, dynamic, and subject to rapid technological advancements, the connected physical operations industry is highly fragmented, with most vendors offering software and/or hardware solutions addressing specific industry verticals or solution sets. Samsara’s competition largely targets individual solutions or operational groupings like fleets or facilities.

A wide range of companies including Lytx, SmartDrive, Verizon Connect, Geotab, Omnitracs, Orbcomm, ZTR, and Motorola provide individual solutions competing with Samsara’s offerings across video-based Safety, vehicle telematics, equipment monitoring, and site visibility. However, at this stage, there are few, if any, other known companies that approach the market with a common data cloud across connected fleets, equipment, and sites.

Samsara’s strategic approach to product development, ideal market conditions, and growth strategies have already proven to be highly effective and are continuing to position the company well for global expansion and long-term success.