Samsara Inc

Previous wording

We were founded in 2015 and have achieved significant growth since our inception. For the three months ended May 4, 2024 and April 29, 2023, our revenue was $280.7 million and $204.3 million, respectively, representing year-over-year growth of 37%. Our net loss was $56.3 million and $67.9 million for the three months ended May 4, 2024 and April 29, 2023, respectively. Our business model focuses on maximizing the lifetime value of our customer relationships, and we continue to make significant investments to grow our customer base.

Current wording

We were founded in 2015 and have achieved significant growth since our inception. For the three months ended August 3, 2024 and July 29, 2023, our revenue was $300.2 million and $219.3 million, respectively, representing year-over-year growth of 37%. Our net loss was $49.6 million and $60.0 million for the three months ended August 3, 2024 and July 29, 2023, respectively. For the six months ended August 3, 2024 and July 29, 2023, our revenue was $580.9 million and $423.6 million, respectively, representing year-over-year growth of 37%. Our net loss was $105.9 million and $127.8 million for the six months ended August 3, 2024 and July 29, 2023, respectively. Our business model focuses on maximizing the lifetime value of our customer relationships, and we continue to make significant investments to grow our customer base.

Previous wording

Unfavorable conditions in the economy, both in the United States and abroad, may negatively affect the growth of our business and our results of operations. For example, our business and results of operations could be affected by global macroeconomic trends and events such as inflationary pressure, interest rate increases and declines in consumer confidence, widespread disruptions of supply chains and freight and shipping channels, increased prices for many goods and services (including fluctuating fuel costs), labor shortages, delayed or reduced spending on information technology (“IT”) products, and significant volatility and disruption of financial markets, as well as other conditions arising from international conflicts, such as the ongoing conflict between Russia and Ukraine, geopolitical tensions involving China, and the conflict in Israel and Gaza, uncertainty around the outcome of political elections, and the emergence of pandemics and epidemics. We are continuously monitoring these global events and other macroeconomic developments and how they may impact us directly or indirectly as a result of the effects on our customers and suppliers.

Current wording

Unfavorable conditions in the economy, both in the United States and abroad, may negatively affect the growth of our business and our results of operations. For example, our business and results of operations could be affected by global macroeconomic trends and events such as inflationary pressure, interest rate increases and declines in consumer confidence, widespread disruptions of supply chains and freight and shipping channels, increased prices for many goods and services (including fluctuating fuel costs), labor shortages, delayed or reduced spending on information technology (“IT”) products, and significant volatility and disruption of financial markets, as well as other conditions arising from international conflicts, such as the ongoing conflict between Russia and Ukraine, geopolitical tensions involving China, and the conflict in Israel and the surrounding region, uncertainty around the outcome of political elections, and the emergence of pandemics and epidemics. We are continuously monitoring these global events and other macroeconomic developments and how they may impact us directly or indirectly as a result of the effects on our customers and suppliers.

Previous wording

Cost of revenue consists primarily of the amortization of IoT device costs associated with subscription agreements, cellular-related costs, third-party cloud infrastructure expenses, customer support costs, warranty charges, and employee-related costs directly associated with our customer support and operations, including salaries, employee benefits and stock-based compensation, amortization of internal-use software development and certain cloud computing implementation costs, expenses related to shipping and handling, packaging, fulfillment, warehousing, write-downs of excess and obsolete inventory, and costs associated with software subscriptions, office facilities, IT-related expenses, and depreciation and amortization of property and equipment.

Current wording

Cost of revenue consists primarily of the amortization of IoT device costs associated with subscription agreements, cellular-related costs, third-party cloud infrastructure expenses, customer support costs, warranty costs, and employee-related costs directly associated with our customer support and operations, including salaries, employee benefits and stock-based compensation, amortization of internal-use software development and certain cloud computing implementation costs, expenses related to shipping and handling, packaging, fulfillment, warehousing, write-downs of excess and obsolete inventory, and costs associated with software subscriptions, office facilities, IT-related expenses, and depreciation and amortization of property and equipment.

Previous wording

We expect our research and development expenses to generally increase in absolute dollars for the foreseeable future as we continue to invest in research and development efforts to enhance our Connected Operations Cloud. Our research and development expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.

Current wording

We expect our research and development expenses to generally increase in absolute dollars for the foreseeable future as we continue to invest in research and development efforts to enhance our Connected Operations Cloud. Our research and development expenses have fluctuated in the past and may in the future fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.

Previous wording

We plan to continue to invest in sales and marketing to grow our customer base and increase our brand awareness. As a result, we expect our sales and marketing expenses to increase in absolute dollars for the foreseeable future. Our sales and marketing expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.

Current wording

We plan to continue to invest in sales and marketing to grow our customer base and increase our brand awareness. As a result, we expect our sales and marketing expenses to increase in absolute dollars for the foreseeable future. Our sales and marketing expenses have fluctuated in the past and may in the future fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses, including seasonally higher spend on conferences and events in the first half of our fiscal year.

Previous wording

We expect our general and administrative expenses to continue to increase in absolute dollars for the foreseeable future to support our growth. Our general and administrative expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.

Current wording

We expect our general and administrative expenses to continue to increase in absolute dollars for the foreseeable future to support our growth. Our general and administrative expenses have fluctuated in the past and may in the future fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.

Previous wording

In December 2021, the Organization for Economic Co-operation and Development introduced a new global minimum corporate tax of 15%, commonly referred to as Pillar Two. While the United States has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation which will apply to us beginning in fiscal year 2026. As we do not currently have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, we do not expect these to materially increase our global tax costs. There remains uncertainty as to the final Pillar Two model rules and their application. We will continue to monitor United States and global legislative action related to Pillar Two for potential impacts.

Current wording

In December 2021, the Organization for Economic Co-operation and Development introduced a new global minimum corporate tax of 15%, commonly referred to as Pillar Two. While the United States has not yet adopted the Pillar Two rules, various other international governments are enacting legislation which will apply to us beginning in fiscal year 2026. We do not currently have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, but we expect to incur additional costs related to compliance with this legislation. There remains uncertainty as to the final Pillar Two model rules and their application. We will continue to monitor United States and global legislative action related to Pillar Two for potential impacts.

Previous wording

Comparison of the Three Months Ended May 4, 2024 and April 29, 2023

Current wording

Comparison of the Three and Six Months Ended August 3, 2024 and July 29, 2023

Previous wording

Revenue increased by $76.4 million, or 37%, for the three months ended May 4, 2024 compared to the three months ended April 29, 2023, primarily due to an increase in customer count and increased purchases of our subscription offerings, including subscriptions to additional Applications, by existing customers.

Current wording

Revenue increased by $80.9 million and $157.4 million, or 37% and 37%, for the three and six months ended August 3, 2024, respectively, compared to the three and six months ended July 29, 2023, primarily due to an increase in customer count and increased purchases of our subscription offerings, including subscriptions to additional Applications, by existing customers.

Previous wording

Cost of revenue increased by $11.1 million, or 19%, for the three months ended May 4, 2024 compared to the three months ended April 29, 2023, primarily due to $6.9 million of increased amortization of deferred IoT device costs, $2.0 million of increased employee-related costs, which included a $1.6 million increase in salaries and benefits and related employer taxes and a $0.4 million increase in stock-based compensation expense, and $1.6 million of increased infrastructure costs associated with our product offerings. The increases in amortization of deferred IoT device costs and infrastructure costs were primarily due to increased sales volume year-over-year.

Current wording

Cost of revenue increased by $14.5 million, or 25%, for the three months ended August 3, 2024 compared to the three months ended July 29, 2023, primarily due to $6.3 million of increased amortization of deferred IoT device costs, $6.3 million of increased infrastructure costs associated with our product offerings, $3.3 million of increased employee-related costs, which included a $2.9 million increase in salaries and benefits and related employer taxes and a $0.4 million increase in stock-based compensation expense, and $0.7 million of increased amortization of internally-developed software, partially offset by $2.3 million of decreased warranty costs. The increases in amortization of deferred IoT device costs and infrastructure costs were primarily due to increased sales volume year-over-year.

Previous wording

Our gross margin increased to 76% for the three months ended May 4, 2024 compared to 72% for the three months ended April 29, 2023, mainly due to operational efficiencies in infrastructure costs, direct labor costs, warranty charges, and deferred IoT device costs.

Current wording

Our gross margin increased to 76% for the six months ended August 3, 2024 compared to 73% for the six months ended July 29, 2023, mainly due to operational efficiencies in warranty charges, direct labor costs, and deferred IoT device costs.

Previous wording

Research and development expense increased by $12.6 million, or 21%, for the three months ended May 4, 2024 compared to the three months ended April 29, 2023, primarily due to a $9.5 million increase in employee-related costs, which included a $6.4 million increase in salaries and benefits and related employer taxes and a $3.1 million increase in stock-based compensation expense, primarily due to increased headcount to support our research and development organization. The increase in our research and development expense was also due to a $2.0 million increase in third-party cloud infrastructure expenses and a $1.2 million increase in IT-related costs and software subscriptions.

Current wording

Research and development expense increased by $25.1 million, or 20%, for the six months ended August 3, 2024 compared to the six months ended July 29, 2023, primarily due to a $18.8 million increase in employee-related costs, which included a $12.3 million increase in salaries and benefits and related employer taxes and a $6.5 million increase in stock-based compensation expense, primarily due to increased headcount to support our research and development organization. The increase in our research and development expense was also due to a $3.1 million increase in prototyping and third-party infrastructure expenses, a $2.3 million increase in software subscriptions and IT-related costs, and a $1.3 million increase in expenses relating to contractor and other professional services.

Previous wording

Sales and marketing expense increased by $28.5 million, or 24%, for the three months ended May 4, 2024 compared to the three months ended April 29, 2023, primarily due to a $21.7 million increase in employee-related costs, which included a $19.0 million increase in salaries and benefits and related employer taxes and a $3.2 million increase in stock-based compensation expense, primarily due to increased headcount to support our sales organization. The increase in our sales and marketing expense was also due to a $3.2 million increase in travel-related expenses and expenses relating to our customer visits, conferences, and other events, and a $2.5 million increase in IT-related costs and software subscriptions.

Current wording

Sales and marketing expense increased by $33.6 million, or 28%, for the three months ended August 3, 2024 compared to the three months ended July 29, 2023, primarily due to a $24.2 million increase in employee-related costs, which included a $19.5 million increase in salaries and benefits and related employer taxes and a $4.0 million increase in stock-based compensation expense, primarily due to increased headcount to support our sales organization. The increase in our sales and marketing expense was also due to a $3.4 million increase in travel-related expenses and expenses relating to our customer visits, conferences, and other events, a $2.0 million increase in expenses relating to professional services, a $1.5 million increase in IT-related costs and software subscriptions, and a $1.1 million increase in expenses relating to lead generation initiatives. These increases were primarily to support the growth in our business.

Previous wording

General and administrative expense increased by $14.4 million, or 33%, for the three months ended May 4, 2024 compared to the three months ended April 29, 2023, primarily due to an $11.1 million increase in employee-related costs, which included a $5.9 million increase in salaries and benefits and related employer taxes and a $5.2 million increase in stock-based compensation expense, primarily due to increased headcount to support the growth of our finance, accounting, human resources, and legal functions. The increase in our general and administrative expense was also due to a$2.7 million increase in bad debt expense, a $2.5 million increase in legal fees, and a$1.5 million increase in software subscriptions. The increases in general and administrative expense were partially offset by a $2.9 million decrease in IT-related costs.

Current wording

General and administrative expense increased by $8.8 million, or 18%, for the three months ended August 3, 2024 compared to the three months ended July 29, 2023, primarily due to a $7.8 million increase in employee-related costs, which included a $4.3 million increase in stock-based compensation expense and a $3.5 million increase in salaries and benefits and related employer taxes, primarily due to increased headcount to support the growth of our finance, accounting, human resources, and legal functions. Our increase in general and administrative expense was also due to a $2.5 million increase in expenses relating to legal fees. The increases in general and administrative expense were partially offset by a $1.3 million decrease in IT-related costs.

Previous wording

Interest income and other income, net, increased by $1.2 million, or 13%, for the three months ended May 4, 2024 compared to the three months ended April 29, 2023. $1.9 million of this increase was primarily due to higher interest yields on investments and a larger investment base of our managed portfolio of marketable debt securities. The increase in our interest income and other income, net, was partially offset by a $0.5 million increase in foreign currency losses.

Current wording

Interest income and other income, net, increased by $0.6 million, or 3%, for the six months ended August 3, 2024 compared to the six months ended July 29, 2023. $2.7 million of this increase was primarily due to a larger investment base of our managed portfolio of marketable debt securities. The increase in our interest income and other income, net, was partially offset by a $2.2 million increase in foreign currency losses.

Previous wording

(1)Stock-based compensation expense-related charges included approximately $0.4 million and $0.2 million of employer taxes on employee equity transactions for the three months ended May 4, 2024 and April 29, 2023, respectively.

Current wording

(1)Stock-based compensation expense-related charges included approximately $0.2 million and $0.2 million of employer taxes on employee equity transactions for the three months ended August 3, 2024 and July 29, 2023, respectively.

Previous wording

(1)Stock-based compensation expense-related charges included approximately $7.0 million and $3.8 million of employer taxes on employee equity transactions for the three months ended May 4, 2024 and April 29, 2023, respectively.

Current wording

(1)Stock-based compensation expense-related charges included approximately $3.6 million and $4.2 million of employer taxes on employee equity transactions for the three months ended August 3, 2024 and July 29, 2023, respectively.

Previous wording

We define non-GAAP net income (loss) as net loss excluding the effect of stock-based compensation expense-related charges, lease modification, impairment, and related charges, and legal settlements. We use non-GAAP net income (loss) in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that non-GAAP net income (loss) provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations. The following table presents a reconciliation of our non-GAAP net income (loss) to our GAAP net loss for the periods presented (in thousands, except percentages):

Current wording

We define non-GAAP net income (loss) as net income (loss) excluding the effect of stock-based compensation expense-related charges, lease modification, impairment, and related charges, and legal settlements. We use non-GAAP net income (loss) in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that non-GAAP net income (loss) provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations. The following table presents a reconciliation of our non-GAAP net income to our GAAP net loss for the periods presented (in thousands, except percentages):

Previous wording

We define free cash flow as net cash provided by 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. The following table presents a reconciliation of free cash flow to net cash provided by operating activities for the periods presented (in thousands, except percentages):

Current wording

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. The following table presents a reconciliation of free cash flow to net cash provided by operating activities for the periods presented (in thousands, except percentages):

Previous wording

Since our founding, we have financed our operations primarily through the sale of equity securities and payments received from our customers. In December 2021, we completed our initial public offering (“IPO”), which resulted in aggregate net proceeds of $846.7 million, including proceeds from the underwriters’ exercise of their option to purchase additional shares of our Class A common stock in January 2022 and net of underwriting discounts and commissions. We have generated significant operating losses from our operations, as reflected in our accumulated deficit of $1,511.4 million as of May 4, 2024. We intend to continue investing in our business, and as a result, we may require additional capital resources to execute on our strategic initiatives to grow our business, particularly if we generate negative cash flows in future quarters. We believe that our existing cash, cash equivalents, and short-term and long-term investments will be sufficient to support working capital, including our non-cancelable arrangements, and capital expenditure requirements for at least the next 12 months.

Current wording

Since our founding, we have financed our operations primarily through the sale of equity securities and payments received from our customers. In December 2021, we completed our initial public offering (“IPO”), which resulted in aggregate net proceeds of $846.7 million, including proceeds from the underwriters’ exercise of their option to purchase additional shares of our Class A common stock in January 2022 and net of underwriting discounts and commissions. We have generated significant operating losses from our operations, as reflected in our accumulated deficit of $1,561.0 million as of August 3, 2024. We intend to continue investing in our business, and as a result, we may require additional capital resources to execute on our strategic initiatives to grow our business, particularly if we generate negative cash flows in future quarters. We believe that our existing cash, cash equivalents, and short-term and long-term investments will be sufficient to support working capital, including our non-cancelable arrangements, and capital expenditure requirements for at least the next 12 months.

Previous wording

As of May 4, 2024, our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments of $845.0 million. Cash and cash equivalents consisted of cash on deposit with banks as well as highly liquid investments with an original maturity of 90 days or less, when purchased. Our investments primarily consisted of U.S. government and agency securities, corporate notes and bonds, and commercial paper. Our primary uses of cash include personnel-related costs, third-party cloud infrastructure expenses, sales and marketing expenses, overhead costs, and funding other working capital requirements, such as inventory and connected device costs to meet our performance obligations related to our Connected Operations Cloud.

Current wording

As of August 3, 2024, our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments of $880.3 million. Cash and cash equivalents consisted of cash on deposit with banks as well as highly liquid investments with an original maturity of 90 days or less, when purchased. Our investments primarily consisted of U.S. government and agency securities, corporate notes and bonds, and commercial paper. Our primary uses of cash include personnel-related costs, third-party cloud and cellular infrastructure expenses, sales and marketing expenses, overhead costs, and funding other working capital requirements, such as inventory and connected device costs to meet our performance obligations related to our Connected Operations Cloud.

Previous wording

Cash provided by operating activities was $23.7 million for the three months ended May 4, 2024. This consisted of a net loss of $56.3 million, adjusted for non-cash charges of $66.4 million, and changes in our operating assets and liabilities of $13.5 million. The non-cash charges were primarily comprised of stock-based compensation expense of $64.7 million and depreciation and amortization of $4.5 million, partially offset by net accretion of discounts on marketable debt securities of $4.0 million. Changes in our operating assets and liabilities during the three months ended May 4, 2024 reflect increases in deferred revenue due to the growth of our business, higher cash collections from customers, and lower prepaid expenses and other current assets, partially offset by higher vendor payments, higher levels of inventories to meet anticipated demand requirements, higher connected device costs, and higher deferred commissions during the three months ended May 4, 2024.

Current wording

Cash provided by operating activities was $41.8 million for the six months ended August 3, 2024. This consisted of a net loss of $105.9 million, adjusted for non-cash charges of $138.8 million, and changes in our operating assets and liabilities of $8.9 million. The non-cash charges were primarily composed of stock-based compensation expense of $136.3 million and depreciation and amortization of $9.1 million, partially offset by net accretion of discounts on marketable debt securities of $8.3 million. Changes in our operating assets and liabilities during the six months ended August 3, 2024 reflect increases in deferred revenue due to the growth of our business and lower prepaid expenses and other current assets, partially offset by lower cash collections from customers, higher levels of inventories to meet anticipated demand requirements, higher connected device costs, and higher deferred commissions during the six months ended August 3, 2024.

Previous wording

Cash provided by operating activities was $10.5 million for the three months ended April 29, 2023. This consisted of a net loss of $67.9 million, adjusted for non-cash charges of $50.3 million, and changes in our operating assets and liabilities of $28.0 million. The non-cash charges were primarily comprised of stock-based compensation expense of $52.9 million and depreciation and amortization of $3.5 million, partially offset by net accretion of discounts on marketable debt securities of $4.2 million. Changes in our operating assets and liabilities during the three months ended April 29, 2023 reflect higher cash collections from customers, increases in deferred revenue due to the growth of our business, lower inventories due to operating efficiencies in our order fulfillment processes, and $10.5 million in tenant allowances received during the three months ended April 29, 2023, partially offset by higher connected device costs and an additional $9.8 million prepayment of rent during the three months ended April 29, 2023.

Current wording

Cash provided by operating activities was$18.2 million for thesix months ended July 29, 2023. This consisted of a net loss of$127.8 million, adjusted for non-cash charges of$111.3 million, and changes in our operating assets and liabilities of$34.7 million. The non-cash charges were primarily composed of stock-based compensation expense of$112.6 million and depreciation and amortization of$7.2 million, partially offset by net accretion of discounts on marketable debt securities of$8.6 million. Changes in our operating assets and liabilities during thesix months ended July 29, 2023 reflect increases in deferred revenue due to the growth of our business, lower inventories due to operating efficiencies in our order fulfillment processes, and higher cash collections from customers, partially offset by higher connected device costs and higher deferred commissions during thesix months ended July 29, 2023.

Previous wording

Cash used in investing activities was $17.7 million for the three months ended April 29, 2023, which primarily consisted of $192.4 million of purchases of investments and $2.5 million of capital expenditures for internal-use software development costs and our office facilities, partially offset by $177.2 million of proceeds from maturities and redemptions of investments.

Current wording

Cash used in investing activities was $33.2 million for the six months ended August 3, 2024, which primarily consisted of $330.1 million of purchases of investments and $10.1 million of capital expenditures for internal-use software development costs and our office facilities, partially offset by $305.7 million of proceeds from maturities and redemptions of investments and$1.2 million of proceeds from sales of investments.

Previous wording

Cash provided by investing activities was $3.1 million for the three months ended May 4, 2024, which primarily consisted of $150.4 million of proceeds from maturities and redemptions of investments, partially offset by $142.3 million of purchases of investments and $5.1 million of capital expenditures for internal-use software development costs and our office facilities.

Current wording

Cash used in investing activities was$34.6 million for thesix months ended July 29, 2023, which primarily consisted of$374.4 million of purchases of investments and$5.5 million of capital expenditures for internal-use software development costs and our office facilities, partially offset by$340.9 million of proceeds from maturities and redemptions of investments and$4.5 million of proceeds from sales of investments.

Previous wording

Cash used in financing activities was $0.3 million for the three months ended April 29, 2023, which primarily consisted of $0.4 million in payments of principal on finance leases, partially offset by $0.2 million of proceeds from exercises of stock options.

Current wording

Cash provided by financing activities was $16.0 million for the six months ended August 3, 2024, which primarily consisted of $16.9 million of proceeds from employee stock purchases under the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) and exercises of stock options, partially offset by $0.9 million in payments of principal on finance leases.

Previous wording

Cash provided by financing activities was $0.3 million for the three months ended May 4, 2024, which primarily consisted of $0.8 million of proceeds from exercises of stock options, partially offset by $0.5 million in payments of principal on finance leases.

Current wording

Cash provided by financing activities was$12.3 million for thesix months ended July 29, 2023, which primarily consisted of$13.2 million of proceeds from employee stock purchases under the 2021 ESPP and exercises of stock options, partially offset by$0.9 million in payments of principal on finance leases.

Previous wording

There were no material changes to our critical accounting policies and estimates during the three months ended May 4, 2024.

Current wording

There were no material changes to our critical accounting policies and estimates during the six months ended August 3, 2024.