This company IPOed at the end of last year. MajorieFool wrote up a nice intro here: https://discussion.fool.com/introducing-samsara-iot-34987376.asp….
They have since reported earnings a couple of times. I thought it was time for another look and maybe to address some of the concerns that were raised in that thread.
What does IOT do:
Samsara Inc. provides solutions that connect physical operations data to its Connected Operations Cloud in the United States and internationally. The company’s Connected Operations Cloud includes Data Platform, which ingests, aggregates, and enriches data from its IoT devices and has embedded capabilities for AI, workflows and analytics, alerts, API connections, and data security and privacy; and applications for video-based safety, vehicle telematics, apps and driver workflows, equipment monitoring, and site visibility. It serves customers across a range of industries, including transportation and logistics, construction, field services, utilities and energy, government, healthcare and education, manufacturing, wholesale and retail trade, and food and beverage.
Sanjit Biswas (CEO) and John Bicket (CTO) cofounded Samsara. They previously founded a company together and sold it to Cisco for 1.2B, so they have done this before. They each own more than 20% of the company, overall there is a lot of insider ownership. Both are graduates of MIT so have technical backgrounds.
Revenue 1Q 2Q 3Q 4Q 2020 $19,179 $25,837 $33,210 $41,639 2021 $50,990 $56,764 $66,217 $75,934 2022 $87,731 $101,043 $113,819 $126,000 2023 $142,645 YoY 2020 2021 165.9%. 119.7%. 99.4%. 82.4% 2022 72.1%. 78.0%. 71.9%. 65.9% 2023 62.6% Non-GAAP Net Margin 2020 (196.2%) (200.0%) (184.2%) (159.8%) 2021 (123.2%) (85.4%) (51.6%) (42.6%) 2022 (42.2%) (29.7%) (26.1%) (14.6%) 2023 (18.4%) Non-GAAP FCF Margin 2020 (203.0%) (171.6%) (177.1%) (177.8%) 2021 (123.5%) (91.0%) (59.2%) (47.1%) 2022 (45.6%) (46.0%) (37.8%) (38.9%) 2023 (35.5%)
Revenue is growing at 63% at a run rate of almost $600M per year. I think the margin expansion is really good as well. The GAAP net income margins took a big hit Q422, when they went public, due to large grants of SBC. That is something to keep an eye on.
IOT is in a crowded field with a lot of players that have been around a while. According to them that only applies to the vehicle telematics part of the business (GPS tracking of vehicles). IOT also combines telematics with video feeds and AI to prevent accidents, improve driver training, and other applications. They also have site and equipment monitoring technology. They claim that their tech allows customers to monitor all operations in one consolidated platform and gain ROI from that.
They have 72-74% gross margin. This is impressive when you realize that this margin is net of the amortized hardware cost, cellular data, and cloud costs (they use AWS). In other words, when a customer signs a contract they provide the hardware, cellular data, and cloud support in that contract. They are still able to gross 72% even after those costs which tells me the software has a lot of value to the customers.
They also have support for over 150 integrations. They support the in-vehicle sensors for a bunch of manufacturers like Deere, Volvo, International, Ford, Mack, etc. So they don’t necessarily have to install hardware.
-Revenue growth and margin expansion are good for a company at $600M run rate
-Good, experienced, founder led management.
-High gross margins
-Mission critical product. If their tech delivers as promised, they will save customers money.
-Huge TAM (~$55B)
-Only 10% of their revenue comes from outside the US. So in the short term the strong dollar should not hurt them, and in the long term they have a huge growth opportunity.
-Crowded field with a lot of competition and established players.
-Free Cash Flow margins lag those of net income because of hardware costs. They will need to manage cash carefully until they are profitable on a non-GAAP basis.
-Hardware could cause supply chain issues in the short term.
If this has piqued your interest I urge you to check out the investor day presentation on their website and also read or listen to some of the calls and conferences.
I do not have a position at this time, but I put IOT on my watch list.