Samsara Inc.

Good afternoon and welcome to Samstar's fourth quarter fiscal 2025 earnings call. I'm Mike Chang, Samstar's Vice President of Corporate Development and Investor Relations. Joining me today are Samstar Chief Executive Officer and Co-Founder Sanjay 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, March 6th, 2025, 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, we'll discuss our fourth quarter fiscal 2025 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. Reconciliations of GAAP to non-GAAP financial measures are provided in 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.

Thanks, Mike, and thank you everyone for joining us today. FY25 was another year of durable and efficient growth for Samsara. We ended FY25 with $1.46 billion in ARR, achieving 32% year-over-year growth or 33% year-over-year adjusted growth. Our growth is driven by our partnership with some of the world's largest and most complex operations organizations. During the year, we grew our customers with more than $100,000 in ARR to 2,506, an increase of 36% year-over-year. We are operating at a rare combination of growth, scale, and profitability. Our momentum reflects the strength of our platform and the large market opportunity ahead of us. We finished the year with a milestone Q4 for large customers. We increased our $100,000-plus ARR customer count by 203, a quarterly record. We also increased our $1 million-plus ARR customer count by 14, which is tied for a quarterly record. We're now landing large enterprise customers that could become $10 million plus ARR customers over time at a faster rate. These customers are global leaders in each of their industries. In Q4, we won one of the top three telecommunication companies in the world, one of the top three LTL carriers in the U.S., and Bimbo Bakeries, the largest commercial baking company in the U.S. We're landing these customers with initial footholds that can lead to years of future expansions that drive durable growth. These larger customers typically have more complex sales cycles that often span several years and are less predictable. We're proud to partner with our customers to transform how the world runs. We're just getting started and are excited for what we can accomplish together in the decades to come. Our customers choose us because we help them operate smarter with our connected operations platform. This includes smarter safety with AI camera alerts, fuel savings with routing, asset utilization with location tracking alerts, maintenance with vehicle diagnostics, and workflows for frontline workers. Our growing data asset helps our customers work smarter with actionable insights. This improves the safety, efficiency, and sustainability of their operations. I'd like to share an example of a customer who's using data to operate smarter. In Q4, we expanded our partnership with one of North America's largest do-it-yourself moving and storage operators. They operate nearly 200,000 trucks, nearly 140,000 trailers, and 250,000 portable storage boxes. They also have over 23,000 rental locations. During the quarter, they added more than 10,000 asset tags to track their new portable storage boxes to improve their end customer experience. They previously tried many other solutions, including RFIDs and QR codes. They chose our asset tag because of its reliability and ease of use. They also expanded into our safety and telematics products in the quarter. In a pilot with us, they estimate that they saved $1 million across safety, idling, and maintenance costs. They saw 61% reduction in safety events, an 82% reduction in distracted driving events, and a 47% reduction in harsh driving events. We're proud to partner with our customers to achieve these incredible outcomes. With better insights, they're operating smarter with data. In our first decade as a company, we've been helping our customers digitally transform. They typically spend the vast majority of their revenue on their operations, which are asset heavy and labor intensive. We began by digitizing their vehicles with safety and telematics. Then we expanded to include heavy machinery, buildings, frontline workers, and smaller high value assets. We've now built one of the world's largest operational data assets. We processed over 14 trillion data points annually, reflecting over 50% year-over-year growth. We also saw more than 120 billion API calls in the last year, also 50% year-over-year growth. This is having an incredible impact. In FY25 with our customers, we helped prevent 250,000 accidents, digitized 300 million workflows, and saved more than 3 billion pounds of CO2. We're in a strategic position to combine AI with our large and unique data asset to make an even greater impact for our customers. We are entering a new age of intelligence. In just the last two years, AI has become 100 times less expensive. It's more widely available than ever before and will become significantly more abundant. This means that over time, we'll be able to apply it everywhere. Our customers are already using AI on our platform for proactive maintenance, training, detecting risky behaviors like drowsiness and more. We believe AI will completely transform our customers' operations. In the future, our customers will use AI to dynamically monitor operations to enhance safety and efficiency, adjust delivery routes based on weather and traffic, and anticipate customer requests. By automating these tasks, AI will help fill labor shortages and skills gaps in operations. We're excited about how this will make our customers' operations safer, more efficient, and sustainable. We're looking forward to partnering with our customers to build this future. We believe we're uniquely positioned to amplify our customer impact and achieve durable growth in the next decade. This is a result of several key factors. First, we're in the early stages of digitizing a massive market. We're generating over $1 billion in ARR from our core vehicle applications alone. Today, less than half of North American commercial vehicles use telematics and only about 10% use safety products. As our customers prioritize vehicle digitization first, we see a clear path to expanding our core applications into a multi-billion dollar business. More broadly, the market opportunity beyond vehicles is even earlier in digitization. We see an enormous opportunity for sustained growth. Second, we're achieving strong momentum with our large enterprise customers. This is driven by a few factors. We're focused on innovation for the enterprise, and we're building products to solve challenges for their complex operations. We're also continuing to invest in an enterprise-focused go-to-market motion, and we're adding more enterprise sales capacity to target this opportunity. As I shared at the top of this call, we had a record number of new, large enterprise customers for the year. They provide significant benefits, including valuable feedback to fuel our innovation, higher retention rates, and greater expansion opportunities. Third, we're continuously innovating and expanding our multi-product platform to solve our customers' toughest challenges. Since founding, we've successfully built and scaled more than eight products. We're seeing our customers use us as their single system of record and increase the use of our products across their operations. Currently, 62% of our large customers use three or more products, up from 58% one year ago and 54% two years ago. As we expand our platform to serve our customers better, we create future expansion opportunities to drive growth. And lastly, we're heavily investing in our team and company culture to serve our growing customer base better. We're proud of the recent awards that we've won that recognize this, including Frost & Sullivan's 2024 Company of the Year Award, Built-In's 2025 Best U.S. Large Company to Work For, and our inclusion in Fortune's 2024 Change the World list. We're operating at a rare combination of scale, growth, and profitability. We're approaching $1.5 billion in ARR with 33% year-over-year adjusted growth and 9% adjusted free cash flow margins. It's been an exciting quarter and year to deliver on our mission to increase the safety, efficiency, and sustainability of the operations that power the global economy. We're grateful to partner with our customers as they modernize their operations. We'd like to thank all of our customers, partners, investors, and Samsarians for joining us on this journey. We also wanted to share that our president of worldwide field operations, Laura Kamey, will be leaving Samsara following a personal leave of absence. However, she will serve as an advisor over the next few months to ensure a smooth transition. Our chief revenue officer, Amit Vyas, and our chief operating officer for go-to-market, Robert Stobaugh, will take over her responsibilities. Both Amit and Robert have extensive leadership experience at Samsara, each with a strong track record over six years, and we're confident in their ability to lead. As always, I'll continue to be heavily involved in the go-to-market function. We win as a team and are grateful for Laura's time with us over the past couple of years. Lastly, we're excited to see many of you at Beyond, our annual customer conference. It will be taking place this June in San Diego, where we will also be hosting an investor day. At Beyond, we'll be bringing together leaders across industries to discuss the state of physical operations, the challenges they're facing, and new ways to deliver value through digitization. We will also be announcing new products to further drive transformation for our customers. We hope you will join us. I'll now hand it over to Dominic to go over the financial highlights for the quarter.

Thank you, Sanjit. Q4 was another quarter of durable and efficient growth. The quarter was highlighted by achieving several new records across important operating metrics, including surpassing $100 million in quarterly net new ARR, adding 203 100K plus ARR customers and 14 $1 million plus ARR customers, and achieving quarterly records for gross margin, operating margin, and free cash flow margin. Q4 revenue was $346 million, an increase of 25% year-over-year, or 36% adjusted growth, which is the same growth rate as last quarter but at a larger scale. FY25 revenue was $1.25 billion, an increase of 33% year-over-year, or 37% adjusted growth. Adjusted revenue growth enables comparability across periods and contains two items – First, Q4 of last year was a 14-week quarter instead of a typical 13-week quarter. Removing the extra week from the prior period results in an additional 10 percentage points of Q4 FY25 revenue growth and an additional 3 percentage points of full-year FY25 revenue growth. Second, constant currency removes the impact of foreign currency exchange rate fluctuations period over period and results in an additional 1% point of Q4 FY25 revenue growth and an additional 1% point of full-year FY25 revenue growth. Q4 net new ARR was $109 million, an increase of 10% year-over-year or 12% adjusted only for constant currency. FY25 net new ARR was $356 million, an increase of 16% year-over-year or 17% adjusted for constant currency. and ending ARR was $1.46 billion, an increase of 32% year-over-year, or 33% adjusted for constant currency. Several factors drove our strong top-line performance in Q4. First, we focused on serving large enterprise customers to drive durable and efficient growth at scale. In FY25, we further prioritized landing the very largest and most strategic enterprise customers and learned the following. One, we've successfully proven we have an enterprise-grade platform, differentiated product portfolio, and operational support required to win the largest enterprise accounts at a high rate. Two, large strategic enterprise sales cycles can span multiple years and are often much more longer and more variable than sales cycles in smaller customer segments. And lastly, many of our largest enterprise customers and prospects have clear paths to becoming $10 million plus ARR customers, and we expect these customers to mostly expand over time versus purchasing wall-to-wall upfront. We ended Q4 with 2,506 100K plus ARR customers growing 36% year-over-year, including a quarterly record increase of 203. We also ended the quarter with 118 $1 million plus ARR customers growing 44% year-over-year, including a quarterly increase of 14, which is tied for a quarterly record. In addition to adding more large customers, we also grew our average ARR per 100k plus customer to 323,000, up from 313,000 one year ago. And the combination of adding more large customers and a higher average ARR resulted in increased ARR mix for 100k plus customers to 55% in Q4, up from 52% one year ago and 48% two years ago. Second, this quarter included a balanced mix of landing new customers and expanding existing customer relationships. For new logos, we added over 1,000 core customers for the sixth consecutive quarter. Additionally, a quarterly record 90 of the 203 100k plus ARR customers added were new logos. Also, nine of the top 10 new customers signed with multiple products. One of our largest new customers in Q4 is a leading provider for the safety and maintenance of gas and water distribution systems, with more than 1,000 field technicians, 2,000 field assets, and 700 vehicles. Their initial purchase included five products across our platform, telematics, video-based safety, equipment monitoring, connected workflows, and connected training. With connected training, they achieved a 98% on-time completion rate and created more than 20 custom courses using our new AI course builder. They also achieved immediate results by deploying asset tags and reducing the 500K they lost annually for misplaced assets. Overall, they expect an ROI of more than 7X. For expansions, 14 of our top 20 customers expanded in Q4 and and seven of the top 10 Q4 expansions included multiple products. Our strengthened expansions also allowed us to achieve our target dollar-based net retention rate of approximately 115% and 120% for core and large customers, respectively. And third, we demonstrated strong execution across several frontier markets. 17% of net new ACV came from international geographies in Q4, tied for the second highest quarterly contribution ever. The international strength was driven by Mexico and the UK, both of which accelerated net new ACV growth sequentially. The UK also contributed its highest quarterly net new ACV mix, and Mexico contributed its second highest net new ACV mix. We also saw momentum across construction, food and beverage, and public sector and markets. Construction drove the highest net new ACV mix of all industries for the sixth consecutive quarter. Food and beverage contributed its highest net new ACV mix in over three years, led by our largest expansion in Q4 with Bimbo Bakeries. the largest commercial baking company in the U.S. with more than 20,000 workers, 5,500 vehicles, 2,500 trailers, 350 tractors, and 11,000 distribution routes. With Samsara, they saw a 70% reduction in collision risk, a 64% reduction in harsh events, and a 49% reduction in policy violations. Public sector had its highest year-over-year growth rate of the year in Q4, led by Miami-Dade, the seventh largest county in the country. Miami-Dade signed a more than $1 million transaction for the Department of Transportation and Public Works and the Department of Solid Waste Management. And we also saw strength in emerging products. In Q4, 15% of net new ACV came from non-vehicle products, the highest mix in the last 10 quarters. Four of the top 10 new customers included a non-vehicle product, and equipment monitoring accelerated year-over-year net new ACV growth for the third consecutive quarter, driven by strength in asset tags. In addition to driving strong top-line growth, we continued to deliver operating leverage across our business as we scale. We delivered quarterly records across all key non-GAAP profitability metrics, including a 78% gross margin, a 16% operating margin, and a 14% free cash flow margin. Okay, now turning to guidance, assuming FX rates as of February 1st. For Q1, we expect revenue to be between $350 and $352 million, representing 25% year-over-year growth, or between 26% and 27% constant currency growth, including a $5 million impact to Q1 revenue. Non-GAAP operating margin to be 7%, and non-GAAP EPS to be between 5 and 6 cents. For full year FY26, we expect revenue to be between $1.523 and $1.533 billion, representing year-over-year growth between 22% and 23%, or between 23% and 24% adjusted for constant currency, including an $11 million impact to FY26 revenue. Non-GAAP operating margin to be approximately 11%, and non-GAAP EPS to be between $0.32 and $0.34. And finally, please see the additional modeling notes in our shareholder letter. Thank you very much. Most physical operations businesses have large operating budgets consisting of physical assets and frontline workers, which consume most of their revenue. Even slight operational improvements can result in millions of dollars of savings for our customers, significantly impacting their bottom line. And Samsara continues to be best positioned to benefit from these long-term market dynamics. And with that, I'll hand it over to Mike to moderate Q&A. Thank you, Dominic.