Samsara’s Rule of 40 streak continues as large customer wins fuel growth

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Connected operations vendor Samsara has achieved the desired Rule of 40 for its third consecutive quarter - where revenue growth and profit margin are equal to, or greater than, 40% - as large customer wins continue to fuel momentum at the company. 

Samsara raised its full year guidance upon release of its first quarter 2024 earnings and also revealed a significant hire in Lara Caimi, who joins as President of Worldwide Field Operations. Caimi was previously Chief Customer and Partner Office, and Chief Strategy Officer before that, at ServiceNow. 

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.

It has since expanded to include workflow technologies to companies with huge physical operations and its Connected Operations Cloud uses AI and machine learning to provide companies with the intelligence they need to run either more safely, more sustainably or more efficiently.

Key figures from the Q1 2024 earnings report include: 

• Q1 revenue of $204.3 million, representing 43% year-over-year growth

• Ending ARR of $856.2 million, representing 41% year-over-year growth

• 1,375 customers with ARR over $100,000, up 53% year-over-year

Commenting on the customer wins, Samsara CEO Sanjit Biswas said: 

Samsara's vision is to empower the industries that power our world, and we continue to see strong adoption of digital transformation for physical operations. Large customer wins, in particular, are fueling our momentum.

In Q1, we added a record 138 large customers, bringing us to a total of 1,375 customers with over $100,000 in ARR, growing 53% year-over-year. This includes Fortune 1000 companies with large and complex operations such as United Rentals, Iron Mountain and Werner Enterprises. 

During the quarter, I was on the road with our executive leadership team in the U.S. and Europe, meeting with some of our largest customers. Our technology is driving meaningful business impact for them, and they are asking us to double down on a few things. 

First, AI-based safety technologies to reduce risk across operations; second, digital workflows to increase efficiency for frontline workers; and last, more platform and data integrations to drive higher asset utilization in the field.

We recently spoke to Samsara Chief Product Officer Jeffrey Hausman, who shed some light on how the vendor’s platform strategy is playing out and how companies are using the data collected within Samsara to feed into other back-office functions, such as payroll and accounts. 

AI and ESG

Biswas also took time during the earnings update this week to highlight a couple of key priorities for Samsara and its customers. Firstly, much like many other vendors at the moment, AI is front of mind for Samsara - but Biswas was keen to point out that this has been the case for some time for the vendor. He said: 

AI has been core to how we built our product over the last 5 years, and our data moat is one of our key competitive advantages. The more operational data we unlock and transform into powerful insights for our customers, the bigger the business impact.

Using the example of a customer, one which is a “leader in storage and information management services” and has more than 25,000 employees, Biswas added: 

They are focused on investing in software that delivers a high business impact and quick ROI. This organization uses our Vehicle Telematics application for asset location and maintenance and is expanding to our AI-powered Video-Based Safety application to improve workplace safety, reduce insurance premiums and lower corporate risk.

Based on results from a pilot study, we anticipate our platform can help them achieve more than a 3x annual ROI, which is roughly a 4-month payback period. By improving their safety program, we expect to see a 54% reduction in safety events, a 91% reduction in mobile usage and a 97% reduction in no seatbelt usage.

On top of reducing accidents and creating a safer work environment, they're also gaining a competitive advantage when recruiting talent in a challenging labor market. These types of results are always amazing to see, and we're excited about the opportunities where AI can unleash the power of data to deliver value for our customers. 

In addition, Biswas highlighted how sustainability is a top priority for Samsara customers - but is having positive knock on effects elsewhere too. He said: 

Our customers are faced with the growing demand from their end customers, investors, employees and policymakers to have more sustainable operations. Lanes Group is a great example of a customer using Samsara to reduce emissions. 

Lanes is a leading wastewater utility solutions provider and the largest independent drainage specialists in the U.K. In their most recent sustainability report, Lanes shared that using Samsara helped to reduce fuel consumption by improving driving behavior for their entire fleet. This allowed them to reduce overall carbon emissions even as their fleet continues to grow.

It's also worth mentioning that Lanes adopted Samsara's Video-Based Safety and have decreased the frequency and severity of accidents. They lowered their insurance premiums and reduced the cost of each claim, generating an annual insurance savings of GBP 250,000 per year. 

We are committed to building a safer and more sustainable world together with our customers and are proud of the progress as we continue on this important journey.

My take

Samsara is currently firing on all cylinders and the company is clearly gearing up for a new phase of growth, as it builds out an experienced executive leadership team that understands how to scale a business beyond $1 billion in revenue. This is largely an untapped market when it comes to digital investment, so there is plenty of room for growth. Execution will be key, however, and Samsara needs to continue to highlight those successful customer stories.