Solid Q2 results for Samsara as it sets out ambition to become ‘system of record for physical operations’

Derek du Preez Profile picture for user ddpreez September 1, 2022 Audio mode
Summary:
Samsara’s Connected Operations Cloud delivered strong growth for the company, which is now nearing over 1,000 customers with an ARR of over $100,000.

Image of Samsara CEO Sanjit Biswas on stage at Beyond 2022 conference
(Image taken by author)

Samsara has delivered a solid set of results for Q2 2023, beating expectations, as co-founder and CEO Sanjit Biswas outlines his ambitions to make the company the system of record of choice for physical operations. 

Samsara started out by providing fleet management solutions to small and mid-sized trucking businesses, connecting sensors in vehicles to its management software in the cloud to help track mileage and other performance indicators. The company now offers more sophisticated AI-enabled video solutions in-vehicle, where it actually coaches drivers to drive more safely. 

The company has since expanded to include workflow technologies to companies with huge physical operations, which have largely been ignored by the enterprise technology industry and have been relying on manual processes. 

But the key underpinning Samsara’s products is its Connected Operations Cloud, which uses AI and machine learning to provide companies with the intelligence they need to run either more safely, more sustainably or more efficiently.

The key figures for this quarter include: 

  • Q2 revenue of $153.5 million, representing 52% year-over-year growth

  • Ending ARR of $662.8 million, representing 52% year-over-year growth

  • 989 customers with ARR over $100,000, up 61% year-over-year

Commenting on the results, Biswas said that whilst Samsara is not insulated from the macroeconomic environment, and is seeing elongated sales cycles compared to periods of stronger economic growth, he argues that the vendor is still in a good position for three main reasons. He said: 

First, our customers are the critical infrastructure that powered the global economy. They spend in diverse industries that include some of the largest food distributors, chemical companies, energy utilities, freight carriers and municipalities. Many of them have been around for over half a century and have survived challenging economic cycles.

Second, our customers are challenged with rising inflation and interest rates, disrupted supply chains, tight labor markets and geopolitical risks. They need solutions that provide a rapid return on investment. Samsara's Connected Operations Cloud is a deflationary lever that helps our customers control costs by running smarter, safer and more efficient operations. 

And third, Samsara is becoming the system of record for physical operations. Customers are using our cloud as a command center for their day-to-day operations. At Samsara, we focus on building relationships with our customers, solving their problems and delivering a great customer experience. At the center of this process is the Samsara customer feedback loop, where we listen and respond to their greatest needs.

In addition to this, Biswas said that Samsara customers are competitive in a tough labor market and that the Connected Operations Cloud gives them a “competitive edge” in attracting, onboarding and retaining workers, as it provides “tools that are in line with the modern technologies they use every day”.

Samsara’s focus, he added, is transforming the worker experience in industries that have largely been ignored by digitization. 

Customer examples

Biswas also used this week’s earnings call to highlight some customer use cases. Firstly, he explained how ArcBest, the 14th largest for-hire fleet in the United States, with over 2,700 city vehicles and over 7,000 drivers, is using Samsara to integrate data from multiple platforms, and as a result has improved their safety program and visibility into their operations. 

ArcBest is using Samsara’s open APIs to create a custom integration that reduces time spent managing unassigned hours of service by 50%. 

Biswas also highlighted one of the largest school districts in the State of Georgia, which serves over 180,000 students in 141 schools, where transporting students to and from school is a top priority. Using Samsara's vehicle telematics and several integrations to manage bus routes, they were able to make their buses more punctual. The school district is also monitoring its vehicle diagnostics, such as tyre pressure and idling , to save money. 

Biswas said: 

In these two examples, we shared how Samsara's Connected Operations Cloud improves the efficiency and sustainability of operations through better data visibility. We're also investing in digitizing the worker experience by eliminating inefficient pen and paper processes, streamlining the user experience and delivering solutions for the modern workforce. 

For example, Superior Plus Propane is enhancing safety workflows to save lives. Superior is a leading US propane distributor serving 24 states with 2,300 trucks and more than 1,000 drivers. Within just six months of installing the AI dashcams and launching our video-based safety coaching programs, they achieved a 90% reduction in speeding. And on top of that, Superior has seen a 52% reduction in on the road accident costs and a 50% reduction in rollovers.

However, it was Biswas’s later comments that caught attention. As Samsara adds workflows to its Connection Operations Cloud, the company is hoping that it can expand its footprint in these organizations that have large physical operations, by becoming their system of record. He said: 

We believe we're in the early stages of a large market opportunity that has been underserved by technology. We want our Connected Operations Cloud to be the system of record for physical operations. As we bring more data into our platform, we're able to provide an increasing number of actionable insights and fundamentally re-imagine the way our customers do business.

Take Liberty Energy for example, with Samsara as their system of record and our open API, Liberty Energy created a custom integration. They have connected real-time operations data from their machines to their tax software. 

As a result, they can more accurately represent their operations and more accurately report to the government. Because of this one integration, Liberty Energy expects to save $10 million every year. They have unlocked the new level of operational visibility and this single integration more than pays for their Samsara investments.

My take

In a period of uncertainty, where vendors have been very hit and miss with their results, Samsara appears to be forging ahead in the right direction. It started with a simple use case that solved a problem for these companies and is now expanding on that with a land and grab approach. Given these organizations have largely been ignored by the B2B software market over the past decade, the opportunity is there for the taking - if it can execute. 

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