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Samsara hits $1 billion ARR milestone and raises full-year guidance

Derek du Preez Profile picture for user ddpreez December 1, 2023
Summary:
It has been a stellar quarter for Samsara, which shows no signs of slowing down on its mission to digitizing the world of physical operations

Global transport and logistics, lots of boxes and transportation fleet made of vans, trucks and an airplane © Franck-Boston - Canva.com
(© Franck-Boston - Canva.com)

Connected Operations Cloud vendor Samsara has delivered a strong set of earnings for Q3 2024 and has said that it is now seeing over $1 billion in Annual Recurring Revenue (ARR). The company, which aims to digitize the world of physical operations, also raised its guidance for the full year and said that it is performing particularly well with its largest customers. 

Samsara’s share price was up close to 12% in after hours trading on Thursday, upon announcing the numbers. 

CEO Sanjit Biswas pointed to the strength of the company’s performance and said: 

Samsara had another milestone quarter. We surpassed $1 billion in ARR, growing 39% year-over-year. We are a strategic partner for the world's leading and most complex physical operations organizations. 

Large customer momentum continues to fuel our growth, and we added a record quarterly – a quarterly record of 148 customers with more than $100,000 in ARR. 

This represents our fastest-growing customer cohort, growing 49% year-over-year. We also added a quarterly record of nine customers with more than $1 million in ARR. 

Biswas said that Samsara’s value is derived from the three core components to its business. Firstly, its single platform for all of a buyer’s operational systems; secondly, the ability for the Samsara platform to ‘work out of the box’; and thirdly the vendor’s strategic customer partnership. He added: 

All of this together is what powers our customers' outcomes and helps deliver clear and fast ROI for their organizations.

Some of the key numbers for Q3 2024 include: 

  • Revenue of $237.5 million, representing 40% year-over-year growth

  • Ending ARR of $1.003 billion, representing 39% year-over-year growth

  • 1,663 customers with ARR over $100,000, up 49% year-over-year

  • 71 customers delivering $1 million or more in ARR, with nine being added in Q3

Samsara said that its revenues for the January 2024 full fiscal year will be in the range of $918 million to $920 million, up from its previous guidance of $896 million to $900 million. 

Biswas said that Samsara’s total addressable market is large and is still in the “early innings of digitization”, adding that physical operations represents more than 40% of global GDP. Talking to the opportunity ahead, Biswas said: 

Our customers are the world's leaders in construction, food and beverage, transportation and warehousing, public sector, agriculture, and more.

We are building the only system of record for physical operations to address this market. We pioneered the Connected Operations Cloud to collect IoT data from a broad and diverse group of vehicles, equipment, sites, workers, and a growing ecosystem of connected assets and third-party systems.

We aggregate all of this data into one common cloud. Our multi application platform continuously delivers applications to solve our customer's most challenging problems. This unlocks an opportunity for us to continue selling and expanding with our customers.

The CEO also pointed out that Samsara’s operational efficiency is growing stronger, highlighting that Q3 2024 is the 14th consecutive quarter of improved operating margins and dollars year-over-year. However, he added: 

While we are proud to have reached the $1 billion ARR milestone, we know that this is just a small step in our journey to transform the world of physical operations. 

Customer examples

Biswas spent time during the analyst call this week also highlighting some customer examples. Firstly, he pointed to a partnership with “one of the largest air carriers in the world”, where Samsara is digitizing its ground equipment across major US hubs. During Q3, Samsara also secured a deal with another major airline, the “world’s largest low cost carrier”, to help their teams use equipment more efficiently and avoid unnecessary spending. Biswas said: 

We gave them visibility in their fleet utilization and helped their employees locate critical equipment in real-time. This decreased both maintenance times and costs and helped to ensure planes were serviced. Based on results from an initial pilot, we estimate the airline can save more than $15 million annually from improvements in utilization, fuel efficiency and operations.

Another example provided was a project with one of the largest speciality contracting companies in the US, focused on construction services, maintenance, replacement, fabrication and engineering services. Biswas said: 

They are a top 10 customer and have had 19 expansions with us since 2018. This quarter, they expanded with us again with over $1 million video-based safety deal. Safety is one of their core values. The wellbeing of their employees, clients, and subcontracting partners is fundamental to their success.

During the initial pilot, the company averaged a 50% reduction in safety events when events were coached. We are proud to drive these meaningful results in ROI ,and improve the safety, efficiency and sustainability of our customers’ operations. 

In just eight years of selling, we are operating at a rare combination of scale, growth and profitability. Of all the U.S. listed software companies, only seven, including Samsara, are at or above $1 billion in ARR, growing faster than 30% and free cash flow positive. This demonstrates our commitment to execution and our strength in the market.

My take

For a vendor that is focused on a sector that has been reticent to digitize compared to other industries, it’s clear that Samsara is showing no signs of slowing down. $1 billion in ARR, strong operating margins, large customers spending more - all good indicators for this vendor. 

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