Samsara Reports Second Quarter Fiscal Year 2024 Financial Results

SAN FRANCISCO--(BUSINESS WIRE)--Samsara Inc. (NYSE: IOT), the pioneer of the Connected Operations Cloud, reported financial results for the second quarter ended July 29, 2023, and released a shareholder letter accessible from the Samsara investor relations website at investors.samsara.com.

"We achieved another strong quarter as we continue to deliver clear, rapid ROI for the world's leading, most complex physical operations organizations," said Sanjit Biswas, CEO and co-founder of Samsara. "In Q2, we ended at $930 million in ARR, growing 40% year-over-year. In addition to our continued customer growth, we are proud to have achieved our first adjusted free cash flow positive quarter."

Second Quarter Fiscal Year 2024 Financial Highlights

(In millions, except percentage, percentage points, and per share data)

	Q2 FY2024				Q2 FY2023				Y/Y Change
Annual Recurring Revenue (ARR)	$	930.0			$	662.8				40	%
Total revenue	$	219.3			$	153.5				43	%
GAAP gross profit	$	160.4			$	109.3			$	51.1
GAAP gross margin		73	%			71	%		2		pts
Non-GAAP gross profit	$	163.7			$	111.9			$	51.8
Non-GAAP gross margin		75	%			73	%		2		pts
GAAP operating loss	$	(69.8	)		$	(65.8	)		$	(4.0	)
GAAP operating margin		(32	%)			(43	%)		11		pts
Non-GAAP operating loss	$	(5.9	)		$	(20.2	)		$	14.3
Non-GAAP operating margin		(3	%)			(13	%)		10		pts
GAAP net loss per share, basic and diluted	$	(0.11	)		$	(0.13	)		$	0.02
Non-GAAP net income (loss) per share, basic and diluted	$	0.01			$	(0.04	)		$	0.05
Net cash provided by (used in) operating activities	$	7.7			$	(37.0	)		$	44.7
Free cash flow	$	4.7			$	(43.2	)		$	47.9
Adjusted free cash flow	$	4.7			$	(38.4	)		$	43.1
Net cash provided by (used in) operating activities margin		4	%			(24	%)		28		pts
Free cash flow margin		2	%			(28	%)		30		pts
Adjusted free cash flow margin		2	%			(25	%)		27		pts

We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles ("GAAP"). See the section titled "Use of Non-GAAP Financial Measures" for an explanation of non-GAAP financial measures and the tables in the section titled "Reconciliation Between GAAP and Non-GAAP Financial Measures" for a reconciliation of GAAP to non-GAAP financial measures.

Financial Outlook

Our guidance includes GAAP and non-GAAP financial measures. For the third quarter and fiscal year 2024, Samsara expects the following:

	Q3 FY2024 Outlook		FY 2024 Outlook
Total revenue	$223 million - $225 million		$896 million - $900 million
Year/Year growth	31% - 33%		37% - 38%
Non-GAAP operating margin	(2%)		(3%)
Non-GAAP net income per share, diluted	$0.00 - $0.01		$0.00 - $0.02

A reconciliation of non-GAAP guidance financial measures to corresponding GAAP guidance financial 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, 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.

About Samsara

Samsara is the pioneer of the Connected Operations Cloud, which is a platform that enables organizations that depend on physical operations to harness Internet of Things (IoT) data to develop actionable insights and improve their operations. With tens of thousands of customers across North America and Europe, Samsara is a proud technology partner to the people who keep our global economy running, including the world's leading organizations across construction, transportation and warehousing, field services, manufacturing, retail, logistics, and public sector. The company's mission is to increase the safety, efficiency, and sustainability of the operations that power the global economy.

Forward-Looking Statements

This press release 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 financial performance, the calculation of certain of our key financial and operating metrics, our market opportunity, industry developments and trends, customer demand for our solution, macroeconomic conditions and any expected benefits of our products, and our competitive position, 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 quantified and could cause actual results and events to differ. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "goal," "guidance," "intend," "may," "objective," "ongoing," "plan," "potential," "predict," "project," "seek," "should," "target," "will," "would," or the negative of these terms or other comparable expressions that concern our expectations, strategies, plans, or intentions. 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 verified, 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 forward-looking events and circumstances discussed in this press release 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 financial performance, including trends in revenue and annual recurring revenue, net retention rate, costs of revenue, gross profit or gross margin, operating expenses, customer counts, non-GAAP financial measures (such as non-GAAP gross margin, non-GAAP operating margin, and adjusted free cash flow margin), our ability to achieve or maintain profitability, the demand for our products or for solutions for connected operations in general, the impact of the Russia-Ukraine conflict, geopolitical tensions involving China, the COVID-19 pandemic, and macroeconomic conditions globally on our and our customers', partners' and suppliers' operations and future financial 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 press release are also subject to other risks and uncertainties, including those more fully described in our filings and reports that we may file 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.

Use of Non-GAAP Financial Measures

This document includes certain non-GAAP financial measures. Reconciliations of non-GAAP financial measures to our financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data.

Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under GAAP. There are a number of limitations related to the use of non-GAAP financial measures versus comparable financial measures determined under GAAP. For example, other companies in our industry may calculate these non-GAAP financial measures differently or may use other measures to evaluate their performance. In addition, free cash flow and adjusted free cash flow does not reflect our future contractual commitments or the total increase or decrease of our cash balance for a given period. These and other limitations could reduce the usefulness of these non-GAAP financial measures as analytical tools. Investors are encouraged to review the related GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures and to not rely on any single financial measure to evaluate our business.

We present these non-GAAP financial measures to assist investors in seeing Samsara's operating results through the eyes of management, and because we believe that these measures provide an additional tool for investors to evaluate our business.

Expenses Excluded from Non-GAAP Financial Measures-Stock-based compensation expense is excluded primarily because it is a non-cash expense that management believes is not reflective of our ongoing operational performance. Employer taxes on employee equity transactions, which is a cash expense, is excluded because such taxes are tied to the timing and size of the vesting of the underlying equity awards and the price of our common stock at the time of vesting, which may vary from period to period independent of the operating performance of our business. Lease modification, impairment, and related charges are excluded because such charges are not reflective of our ongoing operational performance.

Operating Metrics and Non-GAAP Financial Measures

Annual Recurring Revenue-We define ARR as the annualized value of subscription contracts that have commenced revenue recognition as of the measurement date.

Non-GAAP Gross Profit and Non-GAAP Gross Margin-We define non-GAAP gross profit as gross profit plus stock-based compensation expense-related charges, including employer taxes on employee equity transactions, included in cost of revenue. Non-GAAP gross margin is defined as non-GAAP gross profit as a percentage of total revenue. We use non-GAAP gross profit and non-GAAP gross margin in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations.

Non-GAAP Loss from Operations and Non-GAAP Operating Margin-We define non-GAAP loss from operations, or non-GAAP operating loss, as loss from operations excluding the effect of stock-based compensation expense-related charges, including employer taxes on employee equity transactions, and lease modification, impairment, and related charges. Non-GAAP operating margin is defined as non-GAAP operating loss as a percentage of total revenue. We use non-GAAP loss from operations and non-GAAP operating margin in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that non-GAAP loss from operations and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations.

Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per Share-We define non-GAAP net income (loss) as net loss excluding the effect of stock-based compensation expense-related charges, including employer taxes on employee equity transactions, and lease modification, impairment, and related charges. Our non-GAAP net income (loss) per share-basic is calculated by dividing non-GAAP net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Our non-GAAP net income per share-diluted is calculated by giving effect to all potentially dilutive common stock equivalents (stock options, restricted stock units, shares issued under our 2021 Employee Stock Purchase Plan) to the extent they are dilutive. Non-GAAP net loss per share-diluted is the same as non-GAAP net loss per share-basic as the inclusion of all potential dilutive common stock equivalents would be antidilutive. We use non-GAAP net income (loss) and non-GAAP net income (loss) per share in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that non-GAAP net income (loss) and non-GAAP net income (loss) per share provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations.

Free Cash Flow and Free Cash Flow Margin-We define free cash flow as net cash provided by (used in) operating activities reduced by cash used for purchases of property and equipment. Free cash flow margin is calculated as free cash flow as a percentage of total revenue. We believe that free cash flow and free cash flow margin, even if negative, are useful in evaluating liquidity and provide information to management and investors about our ability to fund future operating needs and strategic initiatives.

Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin-We define adjusted free cash flow as free cash flow plus non-recurring capital expenditures associated with the build-out of our corporate office facilities in San Francisco, California, net of tenant allowances. Adjusted free cash flow margin is calculated as adjusted free cash flow as a percentage of total revenue. We believe that adjusted free cash flow and adjusted free cash flow margin, even if negative, are useful in evaluating liquidity and provide information to management and investors about our ability to fund future operating needs and strategic initiatives by excluding the impact of non-recurring events.

Webcast Information and Shareholder Letter

An investor presentation and accompanying shareholder letter is accessible from the Samsara investor relations website at https://investors.samsara.com/. Samsara will host a live webcast to discuss the results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) today. The live webcast may be accessed at https://investors.samsara.com/. Following the webcast, a replay will be accessible from the same website.

SAMSARA INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
	As of
	July 29, 2023				January 28, 2023
Assets
Current assets:
Cash and cash equivalents	$	196,037			$	200,670
Short-term investments		528,766				489,192
Accounts receivable, net		115,422				122,867
Inventories		21,767				40,571
Connected device costs, current		94,061				82,046
Prepaid expenses and other current assets		21,902				22,189
Total current assets		977,955				957,535
Restricted cash		24,086				23,096
Long-term investments		109,723				113,101
Property and equipment, net		58,405				59,278
Operating lease right-of-use assets		92,683				112,624
Connected device costs, non-current		210,500				194,852
Deferred commissions		153,244				140,166
Other assets, non-current		16,036				16,356
Total assets	$	1,642,632			$	1,617,008
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	34,675			$	30,144
Accrued expenses and other current liabilities		49,508				53,824
Accrued compensation and benefits		29,869				36,030
Deferred revenue, current		348,820				300,113
Operating lease liabilities, current		16,469				22,047
Total current liabilities		479,341				442,158
Deferred revenue, non-current		128,217				126,452
Operating lease liabilities, non-current		89,424				100,873
Other liabilities, non-current		9,283				9,506
Total liabilities		706,265				678,989
Commitments and contingencies
Stockholders' equity:
Preferred stock		-				-
Class A common stock		8				7
Class B common stock		23				23
Class C common stock		-				-
Additional paid-in capital		2,233,533				2,107,013
Accumulated other comprehensive loss		(1,001	)			(652	)
Accumulated deficit		(1,296,196	)			(1,168,372	)
Total stockholders' equity		936,367				938,019
Total liabilities and stockholders' equity	$	1,642,632			$	1,617,008

SAMSARA INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share data)
(Unaudited)
	Three Months Ended								Six Months Ended
	July 29, 2023				July 30, 2022				July 29, 2023				July 30, 2022
Revenue	$	219,257			$	153,523			$	423,577			$	296,168
Cost of revenue		58,866				44,257				116,423				83,875
Gross profit		160,391				109,266				307,154				212,293
Operating expenses
Research and development		63,969				41,847				124,335				82,832
Sales and marketing		117,908				91,842				236,863				179,291
General and administrative		48,268				41,359				91,534				85,101
Lease modification, impairment, and related charges		-				-				-				1,056
Total operating expenses		230,145				175,048				452,732				348,280
Loss from operations		(69,754	)			(65,782	)			(145,578	)			(135,987	)
Interest income and other income (expense), net		10,220				1,541				19,115				1,481
Loss before provision for income taxes		(59,534	)			(64,241	)			(126,463	)			(134,506	)
Provision for income taxes		434				40				1,361				763
Net loss	$	(59,968	)		$	(64,281	)		$	(127,824	)		$	(135,269	)
Other comprehensive income (loss):
Foreign currency translation adjustments		2,009				(77	)			1,096				101
Unrealized gains (losses) on investments, net of tax		(1,404	)			-				(1,445	)			-
Other comprehensive income (loss)		605				(77	)			(349	)			101
Comprehensive loss	$	(59,363	)		$	(64,358	)		$	(128,173	)		$	(135,168	)
Basic and diluted net loss per share:
Net loss per share attributable to common stockholders, basic and diluted	$	(0.11	)		$	(0.13	)		$	(0.24	)		$	(0.27	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		531,751,683				511,758,439				529,077,540				509,526,709

SAMSARA INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
	Three Months Ended								Six Months Ended
	July 29, 2023				July 30, 2022				July 29, 2023				July 30, 2022
Operating activities
Net loss	$	(59,968	)		$	(64,281	)		$	(127,824	)		$	(135,269	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		3,709				2,645				7,193				5,005
Stock-based compensation expense		59,656				44,340				112,604				87,952
Lease modification, impairment, and related charges		-				-				-				1,056
Other non-cash adjustments		(2,351	)			765				(8,514	)			2,882
Changes in operating assets and liabilities:
Accounts receivable, net		(14,055	)			6,427				6,767				1,637
Inventories		10,635				2,937				18,803				(5,988	)
Prepaid expenses and other current assets		1,422				84				243				(2,912	)
Connected device costs		(17,957	)			(20,402	)			(27,664	)			(36,714	)
Deferred commissions		(9,560	)			(4,075	)			(13,078	)			(6,333	)
Other assets, non-current		(162	)			(2,922	)			371				70
Accounts payable and other liabilities		3,262				(26,986	)			(5,249	)			(37,218	)
Deferred revenue		27,094				24,712				50,471				40,884
Operating lease right-of-use assets and liabilities, net		5,995				(222	)			4,051				(812	)
Net cash provided by (used in) operating activities		7,720				(36,978	)			18,174				(85,760	)
Investing activities
Purchase of property and equipment		(3,004	)			(6,262	)			(5,503	)			(16,930	)
Purchases of investments		(182,000	)			-				(374,389	)			-
Proceeds from sales of investments		4,474				-				4,474				-
Proceeds from maturities and redemptions of investments		163,719				-				340,878				-
Other investing activities		(50	)			-				(50	)			-
Net cash used in investing activities		(16,861	)			(6,262	)			(34,590	)			(16,930	)
Financing activities
Proceeds from issuance of common stock in connection with equity compensation plans		13,011				10,455				13,170				10,704
Payment of offering costs		-				(466	)			-				(2,208	)
Payment of principal on finance leases		(467	)			(246	)			(915	)			(487	)
Net cash provided by financing activities		12,544				9,743				12,255				8,009
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash		372				(205	)			518				(396	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		3,775				(33,702	)			(3,643	)			(95,077	)
Cash, cash equivalents, and restricted cash, beginning of period		216,348				882,935				223,766				944,310
Cash, cash equivalents, and restricted cash, end of period	$	220,123			$	849,233			$	220,123			$	849,233

SAMSARA INC. RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES (In thousands, except percentages and per share data) (Unaudited)
	Three Months Ended								Six Months Ended
	July 29, 2023				July 30, 2022				July 29, 2023				July 30, 2022
Gross profit and gross margin reconciliation
GAAP gross profit..	$	160,391			$	109,266			$	307,154			$	212,293
Add:
Stock-based compensation expense-related charges (1)		3,292				2,598				6,207				4,358
Non-GAAP gross profit	$	163,683			$	111,864			$	313,361			$	216,651
GAAP gross margin		73	%			71	%			73	%			72	%
Non-GAAP gross margin		75	%			73	%			74	%			73	%
Operating loss and operating margin reconciliation
GAAP loss from operations	$	(69,754	)		$	(65,782	)		$	(145,578	)		$	(135,987	)
Add:
Stock-based compensation expense-related charges (1)		63,850				45,557				120,643				89,224
Lease modification, impairment, and related charges		-				-				-				1,056
Non-GAAP loss from operations	$	(5,904	)		$	(20,225	)		$	(24,935	)		$	(45,707	)
GAAP operating margin		(32	)%			(43	)%			(34	)%			(46	)%
Non-GAAP operating margin		(3	)%			(13	)%			(6	)%			(15	)%

(1)

Stock-based compensation expense-related charges were included in the following line items of our condensed consolidated statements of operations and comprehensive loss as follows:

	Three Months Ended								Six Months Ended
	July 29, 2023				July 30, 2022				July 29, 2023				July 30, 2022
Cost of revenue	$	3,292			$	2,598			$	6,207			$	4,358
Research and development		24,069				14,347				46,122				27,867
Sales and marketing		18,771				14,699				35,091				29,058
General and administrative		17,718				13,913				33,223				27,941
Total stock-based compensation expense-related charges (2)	$	63,850			$	45,557			$	120,643			$	89,224

(2)

Stock-based compensation expense-related charges included approximately $4.2 million and $8.0 million of employer taxes on employee equity transactions for the three and six months ended July 29, 2023, respectively, and approximately $1.2 million and $1.3 million of employer taxes on employee equity transactions for three and six months ended July 30, 2022, respectively.

	Three Months Ended								Six Months Ended
	July 29, 2023				July 30, 2022				July 29, 2023				July 30, 2022
GAAP net loss	$	(59,968	)		$	(64,281	)		$	(127,824	)		$	(135,269	)
Add:
Stock-based compensation expense-related charges, net of applicable taxes		63,850				45,557				120,643				89,224
Lease modification, impairment, and related charges, net of applicable taxes		-				-				-				1,056
Non-GAAP net income (loss)	$	3,882			$	(18,724	)		$	(7,181	)		$	(44,989	)

SAMSARA INC. RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES (In thousands, except percentages and per share data) (Unaudited)
	Three Months Ended								Six Months Ended
	July 29, 2023				July 30, 2022				July 29, 2023				July 30, 2022
Net income (loss) per share, basic and diluted, reconciliation
GAAP net loss per share attributable to common stockholders, basic and diluted	$	(0.11	)		$	(0.13	)		$	(0.24	)		$	(0.27	)
Total impact on net loss per share, basic and diluted, from non-GAAP adjustments		0.12				0.09				0.23				0.18
Non-GAAP net income (loss) per share attributable to common stockholders, basic and diluted (1)	$	0.01			$	(0.04	)		$	(0.01	)		$	(0.09	)
Weighted-average shares used in computing GAAP net loss per share attributable to common stockholders, basic and diluted		531,751,683				511,758,439				529,077,540				509,526,709
Weighted-average shares used in computing non-GAAP net income (loss) per share attributable to common stockholders, basic		531,751,683				511,758,439				529,077,540				509,526,709
Weighted-average shares used in computing non-GAAP net income (loss) per share attributable to common stockholders, diluted (1)		562,834,657				511,758,439				529,077,540				509,526,709

(1)

For the period in which we had non-GAAP net income, diluted non-GAAP net income per share is calculated using weighted-average number of shares of common stock outstanding during the period, adjusted for dilutive potential shares that were assumed outstanding during the period.

	Three Months Ended								Six Months Ended
	July 29, 2023				July 30, 2022				July 29, 2023				July 30, 2022
Free cash flow, adjusted free cash flow, free cash flow margin, and adjusted free cash flow margin reconciliation
Net cash provided by (used in) operating activities	$	7,720			$	(36,978	)		$	18,174			$	(85,760	)
Purchase of property and equipment		(3,004	)			(6,262	)			(5,503	)			(16,930	)
Free cash flow (1)		4,716				(43,240	)			12,671				(102,690	)
Purchase of property and equipment for build-out of corporate office facilities, net of tenant allowances (1)		-				4,797				(10,179	)			13,565
Adjusted free cash flow (1)	$	4,716			$	(38,443	)		$	2,492			$	(89,125	)
Net cash provided by (used in) operating activities margin		4	%			(24	)%			4	%			(29	)%
Free cash flow margin (1)		2	%			(28	)%			3	%			(35	)%
Adjusted free cash flow margin (1)		2	%			(25	)%			1	%			(30	)%

(1)

In April 2023, we settled a lease dispute which was primarily related to lease incentives associated with leasehold improvements in the form of a tenant allowance and received $11.3 million.

Contacts

Investor Contact:
Mike Chang
[e-mail]

Media Contact:
Adam Simons
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