Sales anon,

This week I'm taking a second look at Samsara, a company that I reviewed extensively back in March. As one of the fastest growing tech companies that impacts real-world operations, it's interesting to see whether they've been able to continue to execute at the same level or this fiscal year has introduced challenges.

Well, they sure are growing

Source: Samsara Q2 earnings presentation

Samsara delivered another strong quarter of durable and efficient growth at greater scale. We ended Q2 with $1.26 billion in ARR, growing 36% year-over-year. We also achieved a quarterly record for non-GAAP operating margin. We are the strategic partner to the world’s leading and most complex physical operations organisations. Large customer momentum continues to fuel our growth. We added 169 customers with more than $100,000 in ARR. We also added a quarterly record of 14 customers with more than $1 million in ARR. In Q2, we had wins with the State of Maine, one of the largest supermarket chains in the US and one of the largest retail owned hardware cooperatives globally.
As we grow our customer base, our data asset scales too. We’re proud to announce that we achieved an important company milestone. We now collect more than 10 trillion data points annually on the Samsara platform. In addition to scale, our unique IoT data set has incredible breadth and spans a broad and diverse group of assets.

While obviously they have a smaller install base than helps with the high growth, the metrics here speak for themselves. The company is now comfortably hitting the rule of 40 and continues to scale both under traditional revenue metrics and ARR.

If this is their performance during a soft period in the industry, imagine going back to zero interest rates conditions.

They’re one of the world’s largest crane rental supply companies with over 625 cranes in their fleet. They saved $1.2 million using Samsara from improved driver productivity and compliance. They also expect to save $2.5 million for major maintenance costs. We are proud to partner with our customers to make a real-world impact on their operations. To help meet the needs of our customers, we’ve been accelerating our flywheel of innovation. Our growing dataset and AI-powered insights drive our flywheel. As it spins faster, we deliver more value from our platform and build more products and features for our customers. All of this innovation helps our customers take more action to improve the safety, efficiency and sustainability of their operations.
At Beyond, we launched a new product, our Asset Tag. The Asset Tag is the industry’s first industrial-grade Bluetooth tag to help our customers track and manage their small high-value assets. It can be used for a range of assets from toolboxes and chemicals totes to engines and handcarts. We expect, over time, this will help our customers save millions of dollars a year through increasing asset utilization, preventing asset loss and improving worker efficiency by reducing the time needed to locate stolen or lost assets. In Q2, our first quarter of selling Asset Tags, we reached approximately $1 million in net new ACV. It’s an exciting start and customer feedback has been strong. We are seeing demand from our customers across industries and geographies and learning about new use cases every week.

One of the strongest points in the last quarters has been the pivot towards their non-traditional industries. Their original product was focused on transportation services (physical dash cam with assistant software) but they continue to expand aggressively in what has now become the TAM of “real world operations”. While there has been a clear slowdown across the tech industry, this doesn’t seem to have impacted their ability to scale these new use cases and verticals.

More interestingly, they are taking additional risks in their new product launches by not only focusing on software but also adding new hardware products. This is arguably speaking the biggest difference for founder mode leaders vs professional managers - at a time when profit has become the key performance metric, most executives would rather avoid products with low margin or performance risks such as new additions to their hardware portfolio. From the perspective of a founder however, there is a critical synergy here with their already succesful software implementations that depend on sensor and GPC data at connected devices.

Why rely on the customers to figure it out when you can ensure they have all the relevant data already by using your products?

Our customers are using technology to transform the worker experience. Samsara is their trusted partner to make these jobs better and safer. Last year, we introduced Connected Forms to digitize paper processes for physical operations. Connected Workflows takes this to the next level and goes beyond digitization to orchestrating multistep workflows. Connected Workflows can automatically assign forms, manage approvals and create tasks based on contextual insights. Now every department can easily automate workflows to make work safer and easier from the frontlines to the back office. An example is DeSilva Gates, a leading construction company in California. DeSilva Gates is now automating truck inspections with Connected Workflows. Drivers are prompted to complete inspections on time.
Any reported issues are submitted and addressed right away. And this has saved them about $45,000 a week or more than $2 million on an annualized basis. The second worker experience product we launched was Connected Training. Connected Training helps our customers reduce risk by giving them a way to train workers anytime and anywhere. It does this by giving customers remote access to courses on the Samsara mobile app. Now our customers can build customized learning itineraries to address each worker’s largest risk areas. They can also streamline all their training requirements across the organization. Customers who use Connected Training are already seeing significant benefits. For example, Emery Sapp & Sons, a leading heavy civil construction contractor in the Midwest, saw a 40% reduction in safety events with Connected Training.

6 months ago we discussed Samsara’s unique expansion model into new use cases that is based on obvious extensions of their existing platform. Getting into contract management is not “an obvious play” because there are many established solutions for that. The advantage here however is focusing on the core mission of digitising real-world operations, which means that if you are already helping a company to track a shipment, manage the staff responsible for the shipment and manage the warehouse, why not also include the signing of the paperwork along the way?

So first of all, I think the adoption of the platform has been really strong. This really is a continued pattern we’ve seen for a couple of quarters now. So I wouldn’t say that this was especially different in terms of buying environment other than customers are really seeing clear and fast ROI with the platform and they want to do more. So not just safety and telematics, but monitor equipment, track those assets like you said, connect their workflows into the system. So the impact of new products, I think it strengthens our platform story for our customer. They’re already in the system. They have lots of frontline and back office employees using Samsara and ultimately that helps us deliver more value for them.
In terms of pricing power, I think, really it’s about delivering great value for our customers. We’re seeing strong renewal rates, and that’s what I focus on is making sure our customers are happy that they’re getting tons of value from the product. And if we do that, they’re going to keep coming back.

Customers are happy to pay up when they see a well quantified business case and a vendor with a strong track record on delivering on those ROI estimates.

if you recall in our Investor Day, we shared a demo of basically a chat environment that is powered by the unique data asset that we’ve been creating here at Samsara. So we talked about maintenance, for example, being able in plain English or Plain Spanish, whichever you prefer, be able to tell you which vehicles need maintenance next, what’s wrong with them, all that kind of detail. So we’re excited to experiment. I think this technology is absolutely transformational and can deliver a lot of value for the customers. It needs to be practical and useful in terms of how we deliver it. So over the next couple of months, we’re rolling that out to customers and getting their feedback and enhancing it through our feedback loop.

The most interesting part of Samsara’s strategy right is how well they understand what “AI” in a business case fundamentally means and requires.

Structured and unstructured data that’s managed the right way
Combination of LLMs and Enterprise-grade Machine Learning that’s suitable for the cost envelop per business case
Practical use cases that increase in value at a scale and generate sufficient data that can be utilised for them

The tech sales opportunity

There are two important ways in how to think about the tech sales opportunity in a company.

Are they going directionally in the right way?
What is my specific potential working for this team and manager?

Tech sales careers are built on finding the right balance on average. There are plenty of examples where individuals found success because of outliers in either direction (it was difficult to not make quota working for Zoom in 2021; many sinking ships still have reps become millionaires working the right territory).

Directionally speaking, Samsara is clearly doing the right things. They are capturing the opportunity in a previously barely scratched TAM and building upon both core product strengths and new use cases.

Situationally, due to their rapid growth it’s clear that gaps start to show up in the system.

Positive:

Negative:

Since quota attainment as reported on RepVue is at 55% with 1276 ratings (12 months trailing), we can assume that at least half of the org is actually making quota. The risk for many of the existing reps remains the rapid scaling of the team together with a relatively soft market - they still need to fight for every piece of business, even if it’s an obvious purchase.

Samsara remains a strong recommendation and a company that you should take a strong look at, particurarly if you are interested in selling products to companies that are making stuff happen in the real world. Interviews seem to be following the cookie cutter of 2024:

Show us your metrics
Tell us a deal war story and what did you learn from it
What do you expect from the management team
Team player track record

Good luck out there, sales anon.

The Tech Sales Newsletter #58: Samsara - 6 months later

Well, they sure are growing

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