Introducing Samsara (IOT)

Samsara is a SaaS company that gets 98% of its revenue from subscriptions to its Connected Operations Cloud. They count 13,000 customers with ARR >$5000. Samsara is founder-led.

Samsara recently filed their S-1 statement with the SEC, indicating that they will go public in a few weeks.

What Samsara does

Samsara customers have commercial fleets of vehicles. Customers use Samsara to streamline their operations and cut costs in various ways:
A freight carrier (trucking) reduces vehicle idle time to save fuel.
A city government detects engine fault code alerts to reduce vehicle downtime for maintenance.
A garbage truck company reduces speeding violations by its drivers, thereby reducing lawsuits and insurance costs.
A US Postal Service contractor uses dashboard cameras to collect data on drivers’ behavior. This improves driver safety and allows the customer to win more contracts.
A customer replaces hand-written time cards with automated mileage and hours-tracking. This saves money on wages by eliminating drivers’ fudging of hours.
A dairy transport company uses temperature sensors to ensure appropriate temps are maintained from supplier to warehouse to customer.

These efficiencies are achieved by collecting data from sensors and cameras (IoT devices) installed in fleet vehicles. These data points are sent to the cloud where management can analyze all the IoT data across their entire organization through Samsara’s software. AI algorithms provide insights to management to achieve cost savings, increased safety, increased compliance, and better customer satisfaction.

TAM

Here is the crux of their pitch (from the S-1):

“Unlike retail, advertising, media, and information technology, which have already undergone digital transformation, industries with physical operations are still in the early stages of digital adoption. Historically, the ability to connect their assets to the Internet has been limited by the physical nature of these industries. In addition, the cost and availability of sensors, compute capability, storage, video, and analytical processing have prevented widespread analysis of operations data. However, with advancements in IoT connectivity, cloud computing, video imagery, and AI, we believe industries that depend on physical operations are at the precipice of a massive wave of digital adoption. Samsara is enabling this transformation. We estimate that the total addressable market opportunity for our solution worldwide will be approximately $54.6 billion by the end of 2021, growing … to $96.9 billion by the end of 2024.”

Financials

The S-1 statement is here: https://www.sec.gov/Archives/edgar/data/1642896/000119312521…

Revenue (pg 101)
---- Q1 Q2 Q3 Q4
2019 19 25 33 41
2020 50 56 66 75
2021 87 101 114

Growth YoY
2019
2020 163% 124% 100% 83%
2021 74% 80% 73%

Growth Seq
2019 ----- 21% 32% 24%
2020 22% 12% 18% 14%
2021 17% 16% 13%

Gross Margins
2019 57% 59% 60% 61%
2020 67% 67% 72% 72%
2021 71% 72% 72%

Adj Operating margin
2019 (200%) (200%) (187%) (162%)
2020 (124%) (84%) (52%) (41%)
2021 (42%) (30%) (26%)

Adj FCF
2019 (39) (44) (59) (74)
2020 (63) (52) (39) (36)
2021 (40) (47) (43)

Custs >100K ARR YoY growth
2019
2020 210% 155% 105% 77%
2021 82% 89% 83%

NRR for all custs > 115%
NRR for +100K custs > 125%

Samsara is growing at a high clip with steady and high gross margins, increasing profitability, and a good NRR. They plan on using IOT as their ticker. Any comments are welcome!

Additional Samsara write-ups can be found here:
https://cloudedjudgement.substack.com/p/samsara-benchmarking…
https://tomtunguz.com/samsara-s-1/?utm_source=dlvr.it&ut…
https://www.renaissancecapital.com/IPO-Center/News/88827/IoT…

68 Likes

Growth YoY
2019
2020 163% 124% 100% 83%
2021 74% 80% 73%

Growth Seq
2019 ----- 21% 32% 24%
2020 22% 12% 18% 14%
2021 17% 16% 13%

Total noob so please let me know if I’m out of line. Why is this going down. Supply chain issues or something else?
Page 87 of the S1 shows q1/20 counts of 92/128/190/255/285/326/390/forecasting 452/518/615/715

Which is growth of 36/62/65/30/41/64 (assuming that’s real)
They note they have lumpy because of mergers etc but why is 2022 supposed to be 100+?

2 Likes

I work in this space and watch a couple of companies. I believe there is opportunity here, but there are some hidden issues.

Here are two companies aged between about 6 and 10 in the space.

https://www.aeris.com/
https://autonomic.ai/

Aeris started out reselling Sprint bandwidth and levered that into an IoT company. But they ran into a growth problem: vehicle manufacturers recognized IoT as a key need, but they liked IoT so much, they saw it as strategic and started their own in-house efforts. Which hurts Aeris’s market. Aeris is private.

Autonomic was a startup with some seed money from Ford. Ford liked it so much, they bought the rest of the company. Now it is a wholly-owned subsidiary. This is emblematic of the problems Aeris faces: where can you get volume without being designed out eventually?

So looking at Samsara, I’d be looking closely at who the customers are and whether they can get volume, whether they are working with ‘leftovers’, or whether there is an independent (non-manufacturer) channel with growth potential. That TAM won’t all be available to independent companies.

This is not a deep technology area. It combines a bunch of messy stuff — cloud, cellular, data-in-motion, analytics, GPS applications, and more. But none of those are a bleeding-edge barrier. The technology is a complex commodity. So we need a barrier someplace else. You will find the key feature sets in lots of places: collecting telematics, shipping out commands to devices, tracking, triggering events, etc.

We should also expect to see design-in patterns in sales. Small sales while products are being designed, followed by growth as the new product enters manufacturing and distribution, followed by additional product lines from that customer. But there can be gaps. Or customers can decide to do future work in-house once they understand the tech.

But, for the right one, there is strong growth here. Could Samsara be the one?

I hope that’s useful. I’m keen to contribute what I do know about, since I pick up so much knowledge from the experts here!

I have no investments in this space.

39 Likes

I pass this one.

The revenue and customer growth rates look decent but are lumpy. It may due to a fact they depends on Automotive industry which is lumpy. Just look at major automotive companies year over year sales numbers.

Also, the platform utilizes many hardwares: GPS module, Dash Camera, Wireless sensors, Asset gateways, IP cameras, ID card readers which may face supply chain/demand problems, e.g. Peloton.

Software only companies have no such issues. It’s way better than companies with hardware attached.
Software/database can scale infintely where hardware is limited by outside factors.

The name Samsara is also weird and depressing.

7 Likes

There is another company in this space called Calamp (CAMP) that I had invested in but currently do not have an investment in. The story sounded great with a gigantic TAM with multiple verticals. However, with over 22 million devices installed their revenue has been stagnant over the past couple of years. Their own projections call only for a revenue increase of 8% Q2, 2021 to Q2, 2022 & there long term goal is only 10% year over year revenue growth (CalAmp IR Presentation October 2021). Consider me skeptical of this space.

https://investor.calamp.com/home/default.aspx

shorely

3 Likes