Samsara (IOT) held their investor day on June 22nd. I’ve highlighted some of the most significant take-aways and included a link to the slide deck.
Currently, IOT has data integrations with 240 outside ecosystems and continues to expand the number of integrations to leverage data that measurably improves ROI and payback periods, safety improvements and sustainability. The company continues to expand use cases to build the connected operations cloud in beyond vehicles and into the areas of equipment, sites and workforce.
The company is positioned to win in AI due to
- Volume and breadth of data to train AI models
- Infrastructure designed to scale and rapidly deliver new AI features
- Customer feedback loop to accelerate our AI innovation
Samsara states that they are among 6 software companies with consensus estimates in CY23 of $1B ARR, 30% growth and are FCF positive, which IOT is anticipated to reach by Q4CY23. The other five companies include Bill.com, Cloudflare, Crowdstrike, Snowflake and Z-scaler. Source CapIQ and Factset data as of 6/16/2023.
Key advantages leading to strong and consistent execution in the face of economic volatility include
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Highly predictable subscription business model
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Selling into a generally large, less discretionary operations budget
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Opportunities for hard ROI savings and quick time to payback for customers
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UNIVERSAL ROI + Fuel savings (routing & idling) + Lower insurance premiums + Reduce on road and workplace accidents + Lower maintenance costs + Improve asset utilization + Improved worker hiring and retention
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Quick payback period typically in months
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Beyond the above, digitization unlocks more ROI opportunities
Annual revenue generation from tracking vehicle detention
Identified savings by using alternative energy sources
Faster cash collections from improved visibility and invoice automation
Tax optimization through accurate location reporting
Identified savings from reduced construction equipment rental due to increased asset visibility
Temperature monitoring and alerting system to avoid premature exotherm costs
Reasons for durable growth
- Horizontal platform serving a diversified set of industries
- Massive TAM growing quickly, with many expansion opportunities
- Strong momentum with large customers
- Multi-product adoption driving opportunities for platform expansion
- Expansions create a floor for long-term growth
ARR by industry
- 22% Transportation
- 15% Wholesale and Retail Trade
- 15% Construction
- 12% Field Services
- 11% Logistics
- 6% Utilities and Energy
- 6% Manufacturing
- 5% Other
- 5% Government, Healthcare, Education
- 4% Food & Beverage
Our products address a large, fast-growing market opportunity
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2022 Estimated Market Sizes
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$41B Connected Fleet (safety & telemetry)
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$60B Connected Operations (smart equipment, site visibility & workforce apps)
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2025 Estimated Market Sizes
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$79B (2022-2025 Compounded Annual Growth Rate 25%) Connected Fleet
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$117B (2022-2025 Overall Compounded Annual Growth Rate 22%) Connected Operations
Largest customers are fastest growing cohort
From Q1FY23 to Q1FY24, $100K+ customers grew from 897 to 1,375 (54% growth)
From Q1FY23 to Q1FY24, $1M+ customers grew from 34 to 55 (62% growth)
From Q1 FY22 to Q1FY24, $100K customers grew from 40% to 49% of ARR mix.
Multi-product customers are expanding platform breadth
From Q1FY23 to Q1FY24, the % of large customers with 2+ products increased from 89% to 93%
From Q1FY23 to Q1FY24, the % of large customers with 3+ products increased from 42% to 55%
Of the top 20 customers who adopted 2 to 4 (multi) products
1 was classified as food & beverage
1 was classified as logistics
3 were classified as field services
3 were classified as Utilities and Energy
4 were classified as wholesale & retail trade
4 were classified as transportation
4 were classified as construction
Nearly all of these customers were using vehicle telematics, video-based safety and smart equipment “modules,” and five of them were also using the site visibility “module.”
*sjo here: I was pleased to see that transportation comprised only 20% (4) of the top 20 multi-product customers . I take this as proof that IOT is expanding use cases and industries beyond transportation.
Multi product adoption at scale
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VIDEO-BASED SAFETY $350M+ ARR 30%+ y/y growth
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VEHICLE TELEMATICS $350M+ ARR 30%+ y/y growth
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SMART EQUIPMENT & OTHER $100M+ ARR 30%+y/y growth
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Multi-product customers using Smart Equipment & Other
~1/2 of Core Customers who contribute $5K+ ARR
~2/3 of Large Customers who contribute $100K+ ARR
IOT uses a land and expand approach. Expansions provide strong floor for durable growth.
Net New Annual Contract Volume (NN ACV) - NEW LOGOS (land) VS EXPANSION
New logos (land)went from 67% of lands in FY21 to 50% as of the end of FY23 and was further reduced to 40% as of the end of Q1FY24
Expansion went from 33% of lands in FY21 to 50% as of the end of FY23 and was further grown to 69% as of the end of Q1FY24
An example/case study of a land and expand with a leading Utilities and Energy customer showed how an FY20 land of $2.9M expanded ARR in FY 21 by another $1.6M to 1.5X, and expanded in FY22 by another $1.4M to 2X and expanded in FY23 by another $900K to 2X.
Reasons for efficient growth
- Subscription business model unit economics drive long-term profitability
- Continued operating leverage and working capital improvements with scale
- Effectively managing dilution
IOT expects Non-GAAP operating margin to improve in FY24 from (12%) to (9%)
Adjusted Free Cash Flow Margin is anticipated to improve in FY24 from (17%) to (1%)
IOT expects Rule of 40 to go from 27% in Q1FY23 to 42% as of Q1FY24
Key Investor Highlights
- Large and diverse end markets, underserved by technology
- Operations budget is generally large, less-discretionary, and less competitive
- Hard and fast ROI is a highly sought after customer conversation
- Multiple products (vehicle and non-vehicle) growing fast at scale on one platform
- ~50% of ARR from large customers with significant expansion opportunity
- Rapid operating efficiency improvements with clear path to FCF+ and beyond
Link to investor day slide deck
Samsara-Investor-Day-2023
sjo