Samsara Inc. (NYSE:IOT) Q3 2024 Earnings Call Transcript November 30, 2023
Samsara Inc. beats earnings expectations. Reported EPS is $0.04, expectations were $0.01.
Mike Chang: Good afternoon, and welcome to Samsara’s Third Quarter Fiscal 2024 Earnings Call. I’m Mike Chang, Samsara’s Vice President of Corporate Development and Investor Relations. Joining me today are Samsara Chief Executive Officer and Co-Founder, Sanjit Biswas; and our Chief Financial Officer, Dominic Phillips. In addition to our prepared remarks on this call, additional information can be found in our shareholder letter, press release, investor presentation and SEC filings on our Investor Relations website at investors.samsara.com. The matters we’ll discuss today include forward-looking statements. Actual results may differ materially from those contained in the forward-looking statements and are subject to risks and uncertainties described more fully in our SEC filings.
Any forward-looking statements that we make on this call are based on assumptions as of today, November 30, 2023, and we undertake no obligation to update these statements as a result of new information or future events unless required by law. During today’s call, some of our discussions will include our third quarter fiscal 2024 financial results. We’d like to point out that the Company reports non-GAAP results in addition to and not as a substitute for or superior to financial measures calculated in accordance with GAAP. All financial figures we will discuss today are non-GAAP, except for revenue and revenue growth. Reconciliations of GAAP to non-GAAP financial measures are provided with our press release and investor presentation. We’ll make opening remarks, dive into highlights for the quarter and then open the call up for Q&A.
With that, I’ll hand over the call to Sanjit.
Sanjit Biswas: Thanks, Mike, and thank you, everyone for joining us today. 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 a $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 a $1 million in ARR and seven Fortune 1000 customers. Our customers partner with us because we drive impact for them. As part of our ongoing customer feedback loop, we meet with the frontline and back office workers to understand where they are getting the most value.
Here is what they say sets us apart. First, our single platform for all of their operational systems; second, our simple, intuitive and easy-to-use technology that just works out of the box; and third, our strategic customer partnership. All of this together is what powers our customers’ outcomes and helps deliver clear and fast ROI for their organizations. I’d like to share two examples of this. Earlier this year, we announced a partnership with one of the largest air carriers in the world to digitize its ground equipment across major U.S. hubs. This quarter, we partnered with another major airline, the world’s largest low cost carrier to help their teams use equipment more efficiently and avoid unnecessary spending. We gave them visibility in their fleet utilization and helped their employees locate critical equipment in real-time.
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Q&A Session
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This decreased both maintenance times and costs and help 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 is one of the largest specialty contracting companies in the U.S. focused on construction services, maintenance, replacement, fabrication, and engineering services. 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. Looking forward, we believe we have the foundation to continue delivering durable growth and operating efficiency improvements. First, we are addressing a large market that is still in the early innings of digitization. Physical operations represents more than 40% of global GDP.
They are the mission critical infrastructure that keeps the world running. Our customers are the world’s leaders in construction, food and beverage, transportation and warehousing, public sector, agriculture, and more. Second, 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. Third, 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.
Last, our increasing scale and strong unit economics drive operational efficiency. Q3 is the 14th consecutive quarter where we’ve improved operating margins and dollars year-over-year. 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. In front of us, we have a large and rapidly digitizing market. We are scaling our multi-product platform to address the needs to world’s most complex physical operations organizations. And we have a strong foundation to build on with more than 19,000 core customers, more than 260 partners and thousands of Samsarainas working in harmony. The flywheel that is powering our business is accelerating as we convert our leading operations dataset into AI-powered insights that amplify customer impact.
The first part of the flywheel is investing back in our platform, which has more than 6 trillion data points and 55 billion API calls over the last year. We are focused on increasing the operational dataset in our cloud. There are many drivers that will continue to bring more data in, including expansions to more asset types, international growth, and more ecosystem partnerships. Second, as we increase our unique dataset, we expect to deliver even more insights and solutions for our customers. We’ve pioneered a platform that is purpose-built to capture and curate data, adopt new models through our robust machine learning infrastructure and operate in our cloud and at the edge with IoT devices. All of this allows us to accelerate and expand AI-powered insights for our customers.
Third, more insights will drive more impact. We have been delivering clear and fast ROI by partnering closely with our customers to understand their key operational pain points. This also helps us understand how AI-powered insights can make the jobs of their workers better and safer, and how their operations can become more efficient and sustainable. As we look to the future, our customer feedback loop will continue to unlock more applications such as co-pilots, risk centers and workflows to drive even more customer impact. We are excited about the future and I’d like to say thank you to all the customers, Samsarainas, partners and investors for supporting us on our journey to $1 billion in ARR. We are now operating at a rare combination of scale, growth and profitability, and we are just getting started.
As we scale towards our next billion and beyond, we can look forward to the continued partnership with our customers on their digitization journeys. I can’t wait to see the impact we will make on their communities as we improve the safety, efficiency and sustainability of their operations. I’ll now hand it over to Dominic to go over the financial highlights for the quarter.
