Samsara : Q1 2025 Shareholder Letter (2024)

Legal Disclaimer

This shareholder letter contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements may relate to, but are not limited to, expectations of future operating results or fnancial performance, market size and growth, industry developments and trends, the calculation of certain of our fnancial and operating metrics, capital expenditures, future payroll tax obligations, plans for future operations, including expansion into new geographies and products, headcount and productivity growth, macroeconomic conditions, competitive position, technological capabilities, including AI, inventory capacity and supply chain conditions, customer adoption of and expected results from our Connected OperationsTM Cloud, including cost-savings and return on investment, and strategic relationships, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantifed and could cause actual results and events to differ. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "intend," "potential," "would," "continue," "ongoing", "guidance" or the negative of these terms or other comparable terminology. You should not put undue reliance on any forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Forward-looking statements are based on information available at the time those statements are made, including information furnished to us by third parties that we have not independently verifed, and/or management's good faith beliefs and assumptions as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. In light of these risks and uncertainties, the future events and circ*mstances discussed in this shareholder letter may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. These risks and uncertainties include our ability to retain customers and expand the Applications used by our customers, our ability to attract new customers, our future fnancial performance, including trends in revenue and annual recurring revenue ("ARR"), annual contract value ("ACV"), net retention rate, costs of revenue, gross proft or gross margin, operating expenses, customer counts, non-GAAP fnancial measures (such as adjusted revenue, adjusted revenue growth rate, non-GAAP gross margin, non-GAAP operating margin, free cash fow, adjusted free cash fow, and adjusted free cash fow margin), our ability to achieve or maintain proftability, the demand for our products or for solutions for connected operations in general, the Russia-Ukraine confict, geopolitical tensions involving China, the confict in Israel and Gaza, the emergence of pandemics and epidemics, and other macroeconomic conditions globally on our and our customers', partners' and suppliers' operations and future fnancial performance, possible harm caused by silicon component shortages and other supply chain constraints, the length of our sales cycles, possible harm caused by a security breach or other incident affecting our or our customers' assets or data, our ability to compete successfully in competitive markets, our ability to respond to rapid technological changes, and our ability to continue to innovate and develop new Applications. The forward-looking statements contained in this shareholder letter are also subject to other risks and uncertainties, including those more fully described in our flings and reports that we may fle from time to time with the Securities and Exchange Commission, including our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Except as required by law, we do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

This letter contains statistical data, estimates and forecasts that are based on publicly available information or information and data furnished to us by third parties such as our customers, as well as other information based on our internal sources. While we believe the information and data included in this letter are based on reasonable assumptions, this information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verifed the accuracy or completeness of the information and data provided by third parties and other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of that data nor do we undertake to update such data after the date that this letter is frst released.

The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsem*nt of the platform and products of Samsara.

This letter also includes certain non-GAAP fnancial measures. Reconciliations between our GAAP and non-GAAP fnancial measures, as well as important information about our use of non-GAAP fnancial results and non-GAAP fnancial guidance for future quarters, can be found in our investor presentation and/or earnings press release, both of which are available on our investor relations website. A reconciliation of non-GAAP guidance fnancial measures to corresponding GAAP guidance fnancial measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty and potential variability of expenses, such as stock-based compensation expense-related charges and timing of capital expenditures, that may be incurred in the future and cannot be reasonably determined or predicted at this time. It is important to note that these factors could be material to our results of operations computed in accordance with GAAP.

Sanjit Biswas

Chief Executive Officer and Co-Founder

Samsara had a strong Q1 of our new fscal year as we continue to deliver durable and efcient growth. We ended Q1 with $1.18B in ARR, growing 37% year-over-year. As the strategic partner to the world's leading and most complex physical operations organizations, large customer momentum continues to fuel our growth. This includes recent wins with the Departments of Transportation for both Iowa and Kansas, and VINCI, a Fortune Global 500 construction company based in France with more than 275,000 employees and 70,000 construction projects annually.

Our success with large customers is driven by our continued innovation, which is powered by our customer feedback loop. Over the past few months, I visited many of our largest customers in the US, Canada, Mexico, and Europe. I walked in the boots of some of the largest operators across construction, feld services, transportation & logistics, and energy utilities. Seeing their operations frsthand allows us to better understand their toughest challenges and priorities as they digitize their organizations. These customer insights help shape our vision of how we will continue to expand Samsara's platform for the future of connected operations.

Across the board, our customers are investing in technology that helps them achieve their goal of having safer, more efcient, and more sustainable operations.

DELIVERING CLEAR AND FAST ROI FOR OUR CUSTOMERS

We partner with our customers to deliver clear and fast ROI and improve their operations. Recently, we commissioned IDC to survey 130 Samsara customers to assess the value of our platform, the results of which are published in a white paper entitled The Business Value of Samsara1. The IDC research shows that customers partner with Samsara to be their system of record because we deliver valuable customer impact and provide a fast and meaningful return on investment. We believe their fndings demonstrate that Samsara delivers signifcant cost and operational efciencies, as well as important safety and sustainability gains.

Statistics from IDC Business Value White Paper, sponsored by Samsara, The Business Value of Samsara, IDC #US52102724, and published June 2024

Based on information provided by the customers they surveyed, IDC estimated that Samsara customers realize $2M of savings on average per customer per year, which equates to more than 8x ROI. This includes reducing costs related to vehicle crashes and insurance, spending less on fuel, lowering maintenance costs and extending vehicle lifespans, minimizing lost revenue and other business loss associated with vehicle availability, and increasing driver productivity.

• IDC Business Value White Paper, sponsored by Samsara, The Business Value of Samsara, IDC #US52102724, and published June 2024.

PARTNERING WITH CUSTOMERS TO BUILD A SAFER AND MORE SUSTAINABLE WORLD

Our customers have large, complex operations that are asset and labor-intensive. They often require tens of thousands of frontline workers and assets to build the infrastructure supporting our global economy. At this scale, our customers' top priorities often include improving the efciency of their operations, tracking and reducing carbon emissions, and getting their employees safely home to their families every night.

This is critical to how they run their organizations. We estimate that our Connected Operations Cloud helped our customers avoid 200,000 crashes from occurring and 3 billion pounds of CO2 emissions from entering the atmosphere in one year.

Samsara estimates based on internal analysis

Social Impact

Employee safety is among our customers' top priorities, especially as many work in hazardous environments. Samsara helps organizations reduce accidents and improve their safety programs. This includes helping prevent accidents with AI-detected safety events for real-time alerting and coaching, reducing driver distraction with Mobile Experience Management (MEM), and improving driver protection and security with our engine immobilizer and panic button.

Customer Case Study: Nutrien Ag Solutions

Nutrien Ag Solutions, the world's largest agriculture inputs and services provider, is using Samsara's Video-Based Safety to improve driver safety for their North American commercial feet, as featured in their most recent ESG report. In 2023, they saw a 40% reduction in unsafe driving practices, including speeding, harsh braking, and distracted driving. They use Samsara on more than 11K vehicles in their Retail commercial feet with plans to continue expansion.

Environmental Impact

Our customers are also faced with a growing demand to run more sustainable operations. Using Samsara, they can track their carbon emissions and reduce fuel consumption. This allows customers to better understand where they can make improvements and comply with increasing reporting requirements. Many customers are also exploring the transition from internal combustion to electric vehicles. Using data and AI-driven insights, Samsara can help identify the vehicles that deliver the highest ROI in an EV transition. To further increase efciency and reduce waste, customers are using Samsara's Apps and Workfows to reduce paper usage. In one year alone, our customers digitized 240M documents by using Samsara.

Customer Case Study: Frontier Communications

Frontier Communications, a top provider of broadband internet and digital television service to residential and business customers, is using Samsara to optimize fuel efciency and reduce fuel costs across their feet, as featured in their most recent ESG report. They installed Samsara Telematics in 8,100 vehicles, saving them 320K gallons of fuel a year, which is equal to more than 6M pounds of carbon in 2023.

Like our customers, we use a data-driven approach to help us achieve our ambitious goals and understand where we can make the greatest impact. One area that we're making good progress with is our own sustainability efforts. We are committed to achieving net zero carbon emissions by 2040 with the Science Based Targets initiative (SBTi). Our near-term focus is on reducing emissions by working closely with our key suppliers. We are also investing in clean energy and helping to scale innovative and impactful carbon removal technologies. This includes a virtual power purchase agreement and initiatives like Frontierthat help increase the supply of high-integrity carbon removal credits. You can read Samsara's 2024 Impact Reportfor more details and information.

BUILDING FOR THE LONG-TERM

As we build for the long-term, we will continue to invest in emerging products, our culture, and our customers as we scale and grow.

Transforming the Frontline Worker Experience

We are seeing strong momentum in our emerging products. Last quarter, we released our Connected Forms application into general availability, and our customers are excited to adopt it to improve their frontline worker experience. Connected Forms is our workfow solution that allows our customers' frontline workers to streamline their operations, including inspections and incident reports, through digital forms.

Our customers are already fnding value from this Application. A good example is with one of the largest privately owned drainage and wastewater utility specialists in the UK. They are a service utility provider with more than 3,800 employees and 3,000 assets to serve local government, transportation, rail, telecom, and construction. They have been a customer since 2020, starting with our Video-based Safety and Telematics applications, and this quarter they expanded the partnership further with Connected Forms. Currently, they have more than 30 use cases for Connected Forms, including compliance, labor tracking, attendance, safety briefngs, vehicle inspections, and avoiding timesheet fraud. Their long-term vision is to have one system of record for their entire operations. This will enable them to manage more of their operations data and extract insights and value from one unifed platform.

Building a World-Class Team

Samsara has quickly become a destination for some of the world's top talent. This is critical as we scale our global talent base to support our rapidly growing customer base. We are proud to be certifed by Great Place To Work®in the US, UK, and Poland. This marks the second consecutive year of certifcation in the US and UK, and a frst-time honor in Poland. On average, more than 93% of US, UK, and Poland employees said they were proud to work for Samsara. For many of our employees, it's because they can see their contributions positively impact their communities and the organizations that power the global economy. We were also listed as #8 on Glassdoor's inaugural award list for Best-Led Companies in 2024.

Hosting our Annual Customer Conference

We are looking forward to seeing many of you at Beyond, our annual customer conference, from June 26th to 28th in Chicago. At Beyond, we'll bring together thousands of leaders across physical operations to discuss the challenges they're facing, learn about new products we're announcing, and discover new ways to use Samsara to deliver impact and value for their organizations. We will also be hosting Investor Day on June 27th in Chicago. We hope you join us.

Thank You

It was a great start to the new fscal year. Thank you to our customers, partners, investors, and Samsarians across the globe for your shared commitment to increasing the safety, efciency, and sustainability of the operations that power the global economy. We are excited about the year ahead.

Dominic Phillips

Chief Financial Officer

Q1 FY25 was highlighted by sustained high growth at scale and continued operating efciency improvements, including:

• Maintaining the same adjusted revenue growth rate as Q4 at a larger scale
• Achieving a quarterly record for non-GAAP gross margin
• Achieving a quarterly record for adjusted free cash fow margin

Our durable and increasingly efcient growth demonstrates the large and growing opportunity for digital transformation across the world of physical operations. Regardless of the broader economic environment, our business has continued to be incredibly resilient and deliver consistent results due to a few key reasons:

1. Most importantly, our products create clear ROI for customers (e.g., reducing accidents, lowering insurance premiums, generating fuel and EV energy savings, lowering maintenance costs, and improving asset utilization), often delivering a quick investment payback period measured in months.
2. We primarily sell into a different budget than many other enterprise software companies. The Operations budget is generally larger and less discretionary for our customers.
3. Samsara has a subscription business model (subscription revenue mix is ~98% of total revenue) that produces highly predictable revenue, and we price most of our subscriptions based on a customer's number of physical assets (as opposed to headcount-based pricing), which results in lower ACV risk if our customers' hiring slows or contracts.

The physical economy continues to see strong demand and is labor and asset-intensive. Our customers are increasingly looking for digital solutions to help them reduce costs and improve productivity as they scale their businesses. As a result, physical operations businesses are adopting Samsara's Connected Operations Cloud to achieve their safety, efciency, and sustainability goals.

Q1 FY25 HIGHLIGHTS

Top-line Results

Q1 was another quarter of sustained high growth at scale with $1.18 billion of ending ARR, growing 37% year-over-year, including $74 million of net new ARR, representing 21% year-over-year growth. Additionally, Q1 revenue was $281 million, an increase of 37% year-over-year, the same year-over-year revenue growth as last quarter (after adjusting for the extra week of revenue recognition in Q4 FY24 to enable comparability across periods).

Fiscal year ends on the Saturday closest to February 1 See Appendix for defnitions

1Q4 FY24 was a 14-week fscal quarter instead of a typical 13-week fscal quarter. Adjusted revenue and adjusted revenue growth remove the impact of the additional week of revenue recognition in Q4 FY24 to enable comparability across periods. Actual Q4 FY24 revenue was $276M, including a $20M revenue impact from the additional week

Several factors drove our strong top-line performance in Q1:

• Large Customer Momentum: We focus on serving large enterprise customers to drive durable and efcient growth at scale. Our applications are purpose-built for large customers with complex operations that want extensive visibility over tens of thousands of disparate assets and frontline workers, all on one integrated platform. In general, enterprise customers also provide signifcant benefts, including valuable feedback to fuel our innovation, greater resilience during economic uncertainty due to their size and fnancial stability, and typically more attractive unit economics, including higher retention rates.
• • $100K+ ARR customer count: We ended Q1 with 1,964 $100K+ ARR customers, a quarterly increase of 116, representing 43% year-over-year growth.
  • ARR per $100K+ ARR customer: In addition to increasing our $100K+ ARR customer count, we also grew our average ARR per $100K+ ARR customer from $305K in Q1 FY24 to $316K in Q1 FY25, representing an increase of 4% year-over-year, compared to 0% year-over-year growth in Q1 FY24.
  • Total ARR mix: The combination of more $100K+ ARR customers and an increase in ARR per $100K+ ARR customer grew the overall ARR mix for $100K+ ARR customers to 53% in Q1, an increase from 49% one year ago and 45% two years ago.