Q4 2022 Samsara Inc Earnings Call

<unk> operations cloud help companies across a wide range of industries make the jump from 20th century pen and paper processes to 20, <unk> century digital technologies.

People don't know what it takes to actually run things in the modern age here. It's just nonstop action trash pickup day for a very busy neighborhood the middle of a blizzard rush hour traffic is hitting we own the infrastructure that nobody thinks about we have 14 distribution centers, two and a half thousand via.

Nichols 'twenty 300 assets 350 of those are cranes tow trucks ramp trucks, our street sweeper equipment, and 10 will dump trucks, we are that infrastructure for the 20 <unk> century, and is way too big for us to manage just with the spreadsheet television stations 911 centers cities. If we have a bad day every.

<unk> has a bad day the same server platform has been extremely important and making us a better company because we started working with Sam sorry, we have more data just really have more information to make better decisions connectivity and information is power for us having that transparency that sensor provides allows us to make sure that we're maximizing our potential I can look.

Everything in one screen and so efficient and it's a game changer, we just keep discovering things that your system can do here, it's moving and innovating at the pace we are.

Yeah.

Good afternoon, and welcome to <unk> fourth quarter and fiscal year 2022 earnings call.

Mike <unk>, Vice President of corporate development and Investor Relations. Joining me today are Sam sorry, co founder and Chief Executive Officer, <unk>, <unk>, and our Chief Financial Officer, Dominic Phillips.

In addition to our prepared remarks on this call additional information can be found our shareholder letter press release Investor presentation, and SEC filings on our Investor Relations website at investors <unk> com.

The matters, we'll discuss today include forward looking statements actual results may differ materially from those contained in the forward looking statements.

Any forward looking statements that we make on this call are based on assumptions as of today March 2nd 2022.

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 some of our discussions will include our fourth quarter and fiscal year 2022 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.

All financial figures, we will discuss today are non-GAAP , except for revenues and revenue growth <unk>.

Reconciliations of GAAP to non-GAAP financial measures are provided with the press release and Investor presentation.

We will make opening remarks provide overview of our business for those new to the story dive into Q4 highlights and then open up the call for Q&A with that I'll hand, the call over to Sanjay.

Thanks, Mike and thank you everyone for joining us today.

Before beginning I want to take a moment to recognize the warrant Ukraine. While we don't currently have any employees, there or do business in Ukraine, and Russia. Many of us have friends and family in the region and our Hearts go out to everyone affected by this tragic situation.

Now onto our prepared remarks on our first earnings call as a publicly traded company.

IPO in December was an important milestone in advancing our mission to increase the safety efficiency and sustainability of the operations the power of the global economy.

It would not have been possible without our customers partners investors and all the same starting to help along the way I'd like to take a moment to thank everyone who contributed to <unk> success, we see significant market opportunities ahead and are confident that the best is yet to come.

In fiscal year 2022, we achieved a significant company milestone in surpassing <unk> $5 billion of IRR, while growing more than 60% year over year, reaching this level of scale, while maintaining a high growth rate is a testament to the team's hard work and dedication.

We also continue to see exceptionally strong growth in the $100000 plus <unk> customers. We now have more than 800 customers in this segment, including Roto Rooter services company chefs warehouse Atlas Van lines Sunrun performance food group, the state of Tennessee, and many others.

We see our success with large customers as a sign that our connected operations cloud is resonating with large scale complex physical operations.

Before we get into the details of the quarter given that this is our first earnings call I'd like to spend some time, providing an overview of our business for those new to our story and provide some perspective on what's driving our growth.

Through our work deploying networks during our first venture at Meraki, We got to see a lot of operations up close we saw a huge opportunity to digitally transform the world of physical operations across organizations and logistics supply chain energy utilities, food and beverage distribution construction local governments and more.

These industries are the backbone of our economy and make up more than 40% of global GDP.

We're living in a time of rapid change over the last 10 to 15 years digital transformation has disrupted entire industries, but the way that physical operations businesses work hasn't kept pace. We believe that the next chapter of digital transformation is about connecting the world's physical operations to the cloud.

Operation safer more efficient and more sustainable.

Historically, the complexity of physical operations made it difficult to connect and analyze data at scale recent breakthroughs in technology or unlocking this opportunity.

First the ability to collect vast amounts of data and process. It in the cloud is growing exponentially.

Second more Iot assets are connecting to the internet.

Third an evolution and wireless technologies has enabled higher bandwidth and greater coverage, making it possible to do things extreme HD video in real time and last sensors are now being made smaller at lower cost and higher quality than ever before.

These were all big enablers as we built some Sarah we are bringing the latest in technology to the world of physical operations as we help companies make the jump from 20th century pen and paper processes, the 21st century digital technologies.

For many physical operations businesses digitizing their fleet as the first step to transforming their entire operations.

They are critical to moving people goods and services, they're central to the operating model of almost every physical operations business.

We've seen tremendous traction with our safety and telematics applications for fleet and we believe we're just scratching the surface of this market.

As we began developing tools for fleets, we realized that they arent just a collection of vehicles, they're part of a broader operation. So he started asking questions about the other components of our customers' operations and uncover new opportunities. We saw that many of them have equipment out in the field like tanks generators compressors trailers and other types of industrial assets.

We connected those pieces of equipment to the cloud and offer the same visibility and insights customers had with their fleets customers love that they could get this broader view of their operations on one platform analyze and make changes to their operations based on the insights we provided.

From there the concentric circles of our product offerings started to expand as customers started asking about their loading docks warehouses factory floors and remote sites.

So the next area of technology, we developed was connected sites.

Visibility is an application that lets customers pull video from IP cameras that are already installed and connects them to the cloud.

By bringing different parts of an operation together in a single integrated cloud platform that we call the connected operations cloud, we unlock unprecedented value for our customers.

Here's how the connected operations cloud works.

First we aggregate massive amounts of data from vehicles pieces of equipment and sites using <unk> gateways.

In addition to the data we gather directly we also integrate with Oems and other third parties to bring in external data.

All of this state of flows into our cloud, where we process it aggregated and Richard and run it through our AI and machine learning models.

From there this data can be used to power workflows or provide alerts to customers. Ultimately this manifests into different applications that we license to the customer depending on what problems, they're trying to solve.

Our revenue primarily comes from three to five year subscription contracts. Each license, we sell corresponds to a specific application for a given asset making it easy for our customers to scale up or down depending on their needs.

Our connected operations cloud is operating at a scale that's difficult to replicate and that advantage is only compounded over time the amount of Iot data we process in our cloud has more than doubled from $2 two trillion data points last year to about $4 six trillion this year.

In addition, API calls grew from to $33 billion. This year, an increase of more than <unk> year over year and video recorded on our Iot devices grew to <unk> 85 billion minutes.

We use this massive amount of data to regularly train our AI models and enhance our benchmarking data.

Our customers are able to combine safety and telematics data to unlock new use cases for example customers can exonerated driver by recreating an entire accident. They can also benefit from risk adjusted insurance premiums by quantifying the safety of their fleet.

<unk> data powered applications are meaningfully impacting our customers' bottom line.

As more customers connected the sensor platform the scale of our data growth our models get better and we have even more opportunities to provide rich insights and actionable tools to our customers.

We have approximately 14500 core customers around the world to touch nearly every aspect of the global economy. They are leaders in industries like transportation and warehousing construction field services utilities and local governments.

Our horizontal platform is built to serve a wide variety of industries and requires little to no customization. This allows us to meet the needs of our diverse customer base and efficiently go to market with a horizontal sales motion.

Our global sales teams sell all Samsung applications to customers across all industries.

Our direct sales motion includes an inside sales team and a distributed field sales team. We also work with a network of retail partners.

We estimate our total addressable market to be 55 billion growing to $97 billion by 2024, which represents a 21% compound annual growth rate.

The world of physical operations as rapidly digitizing and we're in the early innings of this massive opportunity.

At <unk>, our people, our culture and our shared mission drives our growth.

Our team delivers world class innovation and customer support that is distinguished them, sorry year over year.

Our laser focus on the success of our customers is the force behind our feedback with powering our product development roadmap and our close relationship with our customers.

This year, we are honored to receive the awards that recognize the impact of our values and our culture, including recognition on the 2021 Forbes cloud 100, the Forbes AI 50, and the financial times as fastest growing companies in the Americas.

With that let's dive into the fourth quarter.

First we saw strong sales momentum in Q4, driven by the addition of new customers and the continued success of our land and expand strategy.

We ended the year with <unk> $558 million up 64% year over year.

During Q4, we added over 90, 100000, plus dollar customers, which brings us to over 800 $100000 AOR customers in total.

I'll touch on some big wins from this quarter.

First we welcomed a new fortune 500 customer in a seven figure deal. This peer to peer car sharing service operates in over 15 airports nationwide.

They saw a sharp increase in demand due to limited rental car availability caused by chip shortages. So they chose <unk> vehicle telematic solution to track and maintain their 6100 vehicle fleet.

Our solutions help keep their fleet running longer and more efficiently now.

Now they are better positioned to gain valuable insights improve efficiency and increase fleet longevity across our extensive operations.

Next one of the largest office retailers in North America chose <unk> for their 1100 vehicles, and 40, plus warehouse and fulfillment centers and a six figure deal there.

They are using <unk> video based safety in vehicle telematics applications to increase safety and reduce carbon emissions across their supply chain.

During the <unk> pilot, they reduced safety events by 73% by using our real time in cab audio alerts and driver coaching.

This quarter. We also saw significant expansions with some of our largest customers I'll highlight two exciting fortunate 500 expansions.

The first is a distribution company with 10000, plus drivers and supporting teams and a multimillion dollar expansion deal. They added our vehicle telematics and driver workflow solutions to their current deployment or video based safety coaching solutions.

<unk> is helping them protect and create new efficiencies for their employees.

The other fortune 500 expansion is one of the world's largest logistics companies with more than 400000 employees and over 220 countries and territories. They replace several disparate solutions with <unk> connected operations cloud.

And now use our video based safety vehicle telematics apps and driver workflows and equipment monitoring applications across multiple business units within their organization.

<unk> is providing an integrated view of their operations, improving their safety record and improving their customer service.

With <unk> they have a data trail in real time visibility from the moment a route has created until the deliveries completed.

Next I want to talk about multi product adoption as I mentioned earlier, we began our platform with the fleet applications and have expanded our offerings to capture data from equipment and sites.

With visibility into more parts of their business.

Customers are able to extract Richard data and achieve better insights into their end to end operations for.

For example, <unk> is 120 year old family bakery that produces and distributes half a million pounds of bread daily across hundreds of stores.

In Q4, they deployed sensor a sight visibility to reduce the risk of theft and damages across their branches retail locations and offices.

In addition, it protects the integrity of the product that ends up in the hands of consumers <unk> now use of stem cell applications for sight visibility video based safety vehicle telematics apps and driver workflows and equipment monitoring.

This gives them real time insights into the robust operations, which supports their long term business goals for safety and efficiency.

Finally, I'd like to share three examples of how we continue to build for the long term.

First we're making ongoing investments in developing our ecosystem of partners and integrations, we now integrate with over 155 partners to unlock data directly into the cloud.

On average our large customers are using four or more integrations.

In addition to software partners, we've successfully integrated with leading Oems vehicles and equipment like John Deere Ford Navistar in Komatsu.

Oems are increasingly embedding sensors, and cloud connectivity and new vehicle and equipment models.

Our OEM integrations help customers to bring Iot data from their assets directly into the <unk> cloud.

We are building an open platform that connects other business critical systems to <unk>.

Our customers get even more value out of our connected operations cloud leveraging our solutions, we provide and the data we gathered.

This makes our platform, even stickier and helps drive long term growth.

Second our customer centric approach and rapid pace of innovation are core to our long term growth strategy. We released over 200 features in FY 'twenty two.

These included new workflows in the same sorry driver app, providing drivers the tools they need to operate safely and efficiently throughout the day.

In Q4, we also released camera connector, which provide 360 degree visibility into road conditions and safety hazards by connecting with multiple camera feeds.

Third we attribute our growth to some sort of differentiated culture and shared mission to increase the safety efficiency and sustainability of the operations of power of the global economy.

Specifically the work, we do helps customers reduce their environmental footprint and it is a competitive differentiator that helps us attract and retain top talent. We plan to continue our hiring momentum in FY 'twenty three as we invest in the business to meet customer demand.

We continued expanding our international footprint FY 'twenty two by opening new offices in Mexico in the Benelux region, our talent base across the organization also continues to grow we recently brought on Dave <unk> as our Chief Information Security Officer.

Dave is an industry veteran with over 20 years of experience building and scaling teams at Salesforce and Microsoft and a welcomed addition to our growing team. Our total employee count is now over 1600, representing approximately 30% growth in FY 'twenty two it's clear that <unk> is a top talent destination.

This was a fantastic quarter and fiscal year percent startup we're in a strong position.

We're also excited to host our customer conference on June 15th and 16th during which we will provide additional insights into <unk> trajectory in the future of physical operations.

I'd like to end with a huge thank you to all of <unk> as well as to our customers partners and investors I know I speak for the whole team when I say, we're just getting started and are excited by the tremendous runway ahead of us with that I'll hand, it over to Dominic for financial Islands.

Thanks, and as a reminder, please refer to our shareholder letter and Investor presentation at investors thought Tim Sarah Dot Com for additional information on our Q4 results in FY 'twenty three guidance.

Q4 was our strongest quarter ever it was highlighted by incredible topline growth driven by continued large customer momentum multi product success and significant expansions within our existing customer base.

Before jumping into the results I first want to give a quick overview of our business model.

More than 98% of our revenue is generated from subscriptions to our connected operations cloud, we typically sell three to five year subscriptions for all of our applications. Each of which includes a standard set of services, including data collection, which usually comes from our <unk> Iot device cellular connectivity access to our cloud based.

Form customer support and warranty coverage because of these services are included in each subscription we recognize revenue from the entire license ratably over the life of the contract.

And as Dan had mentioned earlier each license, we sell corresponds to a specific application for a given asset making it easy for our customers to scale up or down depending on their needs.

I also want to touch on how we think about our customer strategy at the end of FY 'twenty. Two we had more than 28000 total customers approximately half of which are small customers with less than $5000 of IRR, who contribute only 7% of total IRR.

The other half are core customers with more than $5000 of IRR, who contribute 93% of total IRR. This is the segment we are actively investing in going forward.

And within our core customers, we're heavily focused on large customers with more than $100000 of IRR, who contribute 45% of our <unk> mix.

Now, let's get into the results and FY 'twenty, two we delivered meaningful growth at scale with ending <unk> of 558 million growing 64% year over year.

Revenue in FY 'twenty, two was $428 million growing 71% year over year, and our Q4 revenue was 126 million growing 66% year over year.

A few factors drove our strong topline performance.

First our investments in landing new customers and expanding our relationship with existing customers that pay more than $100000 annually are paying off we now have 806 customers with <unk> of more than 100, K. Each an increase of 91 customers in Q4, and an annual increase of 354.

Customers in FY, 'twenty, two or 78% year over year growth <unk>.

As a result, 100, K plus customers now contribute 45% of our total IRR.

Second multi product transactions continued to contribute significantly to our top line growth showing the strength of our connected operations cloud in the market.

Eight of our top 10 deals in Q4 included two or more subscriptions and over 70% of our core customers and 90% of our 100, K plus customers subscribe to multiple applications.

We're also seeing multi product adoption at scale at the end of Q4, our vehicle telematics and video based safety applications, where more than $200 million of IRR, each and a remaining applications combined contribute more than 10% of total IRR.

And finally Q4 was another quarter of strong customer expansions and while we added a record number of new customers in the quarter Q4 was the first quarter ever that more than 50% of our net new ACD came from our existing customer base.

As a result, our large customer dollar based net retention rate continues to be greater than 125% and our total customer dollar based net retention rate continues to be greater than 115%.

In addition to our strong topline performance, we continue to operate more efficiently as we scale as a result, we saw strong year over year leverage across all functions.

Our Q4, non-GAAP gross margin was 74% compared to 72% in Q4 last year, an improvement of two percentage points, driven by lower excess and obsolete inventory expenses.

Our Q4 non-GAAP operating margin was negative 14% in Q4 compared to negative 41% in the same period last year the.

The year over year improvement of 27 percentage points was driven by increased go to market efficiencies, including improved productivity and a stronger focus on cost management.

And our adjusted free cash flow margin improved by seven percentage points year over year, driven by the operating leverage I, just mentioned, but partially offset by negative working capital adjustments primarily from required upfront inventory purchases.

And while the global supply chain disruption continues to put pressure on critical component cost and availability in Q4, we improved our gross margin we shipped enough Iot devices to meet all customer demand and we continued to build a larger inventory buffer to reduce the impact of future supply chain disruptions on our.

<unk>.

And the final Q4 point I want to make as regard regarding hiring in head count.

We primarily go to market with a direct sales model as a result, adding more sales capacity along with improving productivity is a key driver of future growth.

After reducing head count capacity in FY 'twenty, one at the beginning of the pandemic, we reignited our hiring engine in FY 'twenty, two and grew head count close to 30% this year.

In Q4 was one of our largest hiring quarters since COVID-19 emerged and we ended the year with 1616 total employees more.

More than one third of the net new employees in FY, 'twenty, two and more than 40% of the net new sales and marketing employees in FY 'twenty two started in Q4 alone.

<unk> on our average ramp times, we expect the productivity of new sales hires in Q4, FY 'twenty two to be fully productive by the end of FY 'twenty three.

And in addition to ramping productivity, we expect to hire even faster in FY 'twenty three to drive durable growth for years to come.

Okay now turning to guidance for Q1, FY 'twenty three we expect total revenue to be between $130 and $132 million representing year over year growth between 48% and 50% non.

non-GAAP operating margin to be approximately negative, 25% and non-GAAP EPS to be between negative seven and negative <unk>, assuming 507 million weighted average shares outstanding.

For full year FY 'twenty, three we expect revenues to be between 568% and $578 million representing year over year growth between 33% and 35% non.

non-GAAP operating margin to be approximately negative, 22% non-GAAP EPS to be between negative <unk> 25, and negative <unk> 27.

Assuming 514 million weighted average shares outstanding please.

Please note we provide guidance based on our margin expectations or our operating metrics as a percentage of revenue instead of one dollar based results to align with our philosophy of prioritizing investments for growth, while driving margin leverage in our model and finally, we included some additional modeling notes for full year FY 'twenty three.

Our shareholder letter.

So to summarize we're very pleased with our Q4 results in our first quarter as a publicly traded company. We are operating in large fast growing markets and our customer demand has never been stronger as they embrace digital transformation to drive safety efficiency and sustainability across their physical operations with that ill hand, it over to Mike <unk>.

Iterate Q&A. Thanks, Amit we will now open the line for questions. When it's your turn please limit your questions to one main question and one follow up question.

The first question today comes from Keith Weiss of Morgan Stanley followed by Sterling Auty at Jpmorgan.

Excellent. Thank you guys for taking the question and very nice.

Initial quarter, great to see that outperformance on the top line.

Was hoping you could talk a little bit about the competitive environment both in terms of.

Obviously, you guys are taking a lot of share in this market. These are growth rates well ahead of the overall market growth.

Who are the competitors youre seeing and why is since our winning and gaining so much share and maybe as a follow on question you talked about partnerships and integrations with Oems to get the data from sensors that they are embedding is there any sense to which those Oems are becoming more of a competitive threat or is the heterogeneity.

You mentioned two two strong offer them to become real competitors to Watson <unk> offering.

Hi, Keith this is Sanjay.

So on a competitive point, we see a number of different competitors, depending on the kind of application were engaging with the customer on so for example, there are different competitors in telematics versus driver safety versus even areas like compliance connected equipment and connected sites. So it's a fragmented set.

A big pattern. However is that they tend to be legacy incumbents. There technologies haven't changed in 15 to 20 years and the solutions are fragmented. So the data silo the customers can gain insights from connecting all that data together. So the biggest difference that we offer the customer is that where one single consolidated platform. We have a massive data advantage I talked about some of the statistics.

Earlier in the call, but the amount of video processing in our cloud has now expanded.

The amount of data we're collecting the clouds expanded the number of connections. We offer is also unprecedented so that's a big differentiation I think one of the reasons, we see customers switching over so quickly.

And then in terms of market dynamics, I think the telematics market.

<unk> has been around for some time is more penetrated the driver safety market is more greenfield and so we are just seeing the market expand this is a $55 billion Tam growing to about $100 billion.

By 2024, so it's just it's a growing market as well the.

The second part of your question you asked about partnerships the Oems, whether they're competitive I think you touched on it which is what we see today is that our customers have heterogeneous suites. They don't just drive one maker one model a vehicle and so they want to see data across all of their operations and often not just trucks, they want to see their warehouses or factories their equipment on one place and so.

Our OEM partnerships are really kind of playing into that where we can connect the data to our cloud directly it's a better customer experience in terms of it being seamless and software driven.

But it does provide that full visibility and thats, our differentiation and thats something that Oems alone cannot offer.

Excellent.

Amit.

Okay. Our next question comes from Sterling Auty of JP Morgan, followed by Kash Rangan at Goldman Sachs.

Yeah. Thanks, Hi, guys. So I'll just ask one question.

So if I Simplistically think about your business as being.

Solutions that are either in or attached to vehicles versus out of vehicle. When you look at the new customers that you brought on during the quarter what percentage of those took something that was outside the vehicle so like warehouse and some of the other use cases that you described.

Yeah, Hey, Sterling it's domenick.

The bulk of our <unk> and the new customers that we on boarded in Q4 and expanded to in Q4.

Our using.

A vehicle based solutions, whether that's telematics.

Safety.

Driver applications and workflows about 10% of our IRR is outside of the vehicle so that things like connected sites and connected equipment I think it's worth mentioning that the connected equipment product.

This was the largest net new ACB mix that we've seen ever in that in that in that in that product and so.

We're still seeing a lot of momentum in the vehicle based solutions.

But a nice a nice quarter.

And our emerging products as well.

Understood. Thank you.

Our next question comes from Kash Rangan at Goldman Sachs, followed by Matt Hedberg of RBC.

I Hope you can hear me okay.

I'll stick to it I'd say, yes, and yes.

It would be lost you their cash.

Let's move forward.

Cash I think your question really goes back.

So let's move forward, let's let's move to Matt Hedberg of RBC, followed by Kirk <unk> at Evercore.

Matt are you won at that question.

Oh, sorry about that guys.

I unmetered onto zoom, but not on my phone strong quarter guys.

When we think about the potential drivers <unk> is something that's really starting to resonate I think with partners as well as investors is a tailwind here within that kind of the app and driver workflow I guess, maybe broadly compliance <unk>.

Important is that when we think sort of long term catalyst for growth in that segment.

So Matt I'll take that the standard <unk>.

<unk> has been a nice tailwind to the business, but it's been around for quite some time in fact, when we first started shipping the telematics product several years ago. The ELV mandate was just coming to the foreground and has continued to be in place now for heavy vehicles here in the United States that being said over three quarters of our business.

The vehicles that don't require <unk> in other words, they're not covered by the mandate now those drivers often benefit from the driver based app that we offer and the tools. So we simplified things like the work around inspections startup date and the end of day workflows things like that so we are seeing strong adoption of our apps and we expect that to continue and <unk> is a feature on that but it's again not required.

For all the vehicles. So we're happy to have it as part of the feature set but we're actually just seeing strong adoption of apps and general out in the field.

Got it that makes a lot of sense and then Tom one for you, obviously, a huge market opportunity and I think you alluded to that.

Your spending expectations international.

As massive obviously as well and it's really underpenetrated from a sensor perspective, how do you think about allocating expenses from an international perspective, given obviously, a large market domestically here, but an untapped international opportunity.

Yes, it's really it's a fine balance the market opportunity in North America is still very very large <unk>, 90% of our <unk>.

As in the U S and about 10% outside of the U S.

So we're still seeing a lot of incredible growth in our own backyard and that is where the bulk of our investment dollars are but what we do recognize that the same problems that exist for customers in the U S exists are very similar problems that exist in other markets and so we are investing that's one of the big priorities for us as we go into FY 'twenty three is more.

Expansion and today, we are really focused on areas like Western Europe , Canada, and Mexico and would expect those regions to grow faster than the U S. Although at smaller scale at this point.

Thank you.

Our next.

Comes from Kirk <unk> at Evercore, followed by Michael <unk> at Wells Fargo.

Yes.

Yes.

Great Hi, guys. This is actually Peter Berkeley, I'm filling in for Kirk Congrats on a great quarter and thanks for taking my questions here.

So I guess first to start us off hire.

Hiring in <unk> was obviously, a very impressive 30% year over year.

The commentary, suggesting that you're going to hire even faster coming into this next year. So I guess just with that as well.

As a baseline given.

What we've been hearing about the competitive landscape in terms of this hiring talent.

I'm curious how that plays into your hiring intentions for fiscal 'twenty three.

Yes, we really stepped on the gas it's sorry, it's Dominic Peter we really stepped on the gas hiring wise in Q4.

As I mentioned, one third of our total net new employees in the entire year started in Q4 and within sales and marketing more than 40% of those FY 'twenty. Two hires started in Q4. So a lot of focus on it we were able to hit our FY 'twenty two goal of getting to over 600 employees and as you mentioned almost 30.

1% growth.

And the expectation is to grow even faster in FY 'twenty three so.

Q4 is an incredible hiring quarter from a gross adds perspective, but it was also our lowest attrition quarter that we've seen since pre COVID-19 . So.

We're really pleased with the momentum that we saw in Q4 and leading into FY 'twenty three.

Great. That's helpful. And then just maybe if I could just sneak one more in here.

Obviously the expansion within customers really impressive you are seeing more customers adopting more and more products, which is great.

Curious on the net new.

Net new customer adds side are you seeing customers sort of land adopting maybe two or three products or is the dynamic has not changed that much meaning in Atlanta is still relatively small and then grow from there.

Yes, it's really a mix as I mentioned in the prepared remarks, I will I mean, it was an incredible expansion quarter for us, but we also it was the largest number of new logos that we've ever added as well and so it was a really nice balance of both.

And when we see customers land with with one application or with multiple applications more than 70% of all of our customers have two or more products.

And so that that continues to be a big reason that customers are selecting us eight of our top 10 deals in the quarter were multi product as well and so we're seeing a really nice mix, whether they're landing with one product.

Or landing with multiple products.

Awesome helpful and congrats again.

Our next question comes from Michael churn at Wells Fargo, followed by Alex Zukin at Wolf.

Hey, Thanks appreciate you taking the question and congrats on another major major milestone here.

Dominic we know these are three to five year deals. We just talked about the expansion rates youre seeing with larger customers can you just talk about the visibility of that provides in this model and maybe your framework and philosophy around guidance given the degree of visibility you might have with some of those larger customers.

So as I talked about the business more than 98%.

Subscription recurring revenue ratable revenue recognition, which provides us a lot of a lot of visibility going into it.

Period, we have more than 90% of our of our revenue is known and so we've got tremendous visibility into that into the next quarter, but also into the into the full year I would say around guidance look at this as are our first guidance out of the gate as a public company.

It's also our first guidance of the fiscal year and so we want to make sure that we're putting out numbers that we feel highly confident about hitting and then have the ability to increase our numbers throughout the year as we see how our performance unfolds.

That's helpful. Just if I could sneak in just a quick follow on on the margin side I mean, what stands out is the head count that you showed relatively flat on where you ended fiscal 2000, and so are there efficiency gains you'd flag that gives you confidence in the longer term margin structure of the business given the tradeoffs, you're making towards growth currently thanks.

We are seeing incredible leverage across all of our functions. So all the way up to gross margin, we improved by two percentage points year over year sales and marketing R&D G&A, we're just getting more efficient we're more productive and I think a lot of that is being driven by just our leadership position within within the market.

Decreasing sales cycles, increasing win rates and.

It is providing a lot of momentum in the business and a lot of leverage that we expect to be able to continue to.

To show period over period.

Thank you thanks, Michael.

Our next question comes from Alex Zukin at Wolf, followed by <unk>.

Cash Rangan at Goldman Sachs.

Perfect Hey, guys.

Yeah.

So maybe just the first one for Sanjay as investors think about some sort of maybe two to three years out.

It's the right way to think about that product mix from an IRR perspective in the sense of if I think about a product that maybe or set of products Youre incrementally. Most excited about do you see.

A samsara, where its a third a third a third at some point and kind of what are the products that you think get you there.

So Alex I think what we're most excited about is this platform were trying to give our customers full visibility over their physical operations. So that means connecting those fleet assets, giving them visibility of our safety, but also their equipment and their sites and more so the way that I think about it isn't so much about.

One application versus the other it's about enabling that entire platform. The market that we're serving with telematics and safety is very very large if you think about the Tam there at $55 billion and it's growing 20% year over year. So we want to make sure that we continue engaging with customers and expanding those deployments and getting more folks on the platform on the equipment side is.

Dominic mentioned, we had a great quarter for connected equipment is our best quarter. Yet. So that is an application that is also growing very fast, but it's just everything is trying to kind of keep up with the growth. There. So I don't know that youll see the mix significantly change, but you should see this growth rate sustained and Thats really where were focused and then thinking about new applications that we can layer on top.

Add onto this platform over time, so in the limit Alex I would say that you should expect us to see to ship multiple applications. These customers not just two or three.

Perfect and then maybe for you a two parter just.

I think about pipeline construction as you look into fiscal 'twenty two.

Versus our calendar 'twenty two versus prior year at the same time what are some of the if we think about growth limiters, whether its quota carriers our supply chain.

Or any other element just to keep in mind as you see this this opportunity set in front of you.

I think that at this time now versus where we were a year ago. We obviously were coming out of COVID-19 coming into calendar year 'twenty.

<unk> 21, and so I think we have a lot more.

Visibility and momentum behind us and a lot more confidence that the customer demand will continue to be there now that we're kind of.

Six quarters beyond beyond that kind of initial impact and so we feel really good about the pipeline as we go into FY 'twenty, three which is and this is again, it's a direct sales model subscription business direct sales and so one of the Limiters is sales capacity, which is why we've really started to reignite that hiring engine in FY 'twenty two.

In particular in Q4, and we expect to.

Push that momentum into FY 'twenty, three bringing on more capacity and then again this is a.

Our sales model that requires the capacity to ramp over time and so we're excited about that new capacity coming on this year supply chain.

<unk> is also a constraint is.

Navigating through this through this disruption we have been able to stay pretty nimble and we've been able to successfully find enough Iot devices to meet all of our customer demand, but it's something that we are monitoring and it's still potential headwind as we go into FY 'twenty three.

Perfect. Thanks, Congrats guys great job.

Our next question comes from Kash Rangan of Goldman Sachs, followed by Derrick Wood at Cowen.

Can you guys hear me Okay. This time, that's great cash perfect tariffs.

Tariffs of driving and getting disconnected from the connected operations slowed that cover our quarterly earnings conference call.

Ironic that I've actually driving it anyway. So I wanted to say congratulations on your first quarter as a public company.

Question for Sanjay.

As you look at the.

The market is one can make those make the market ought to be fairly horizontal it's more of a control C control V. Just.

Expand.

Deployments, but part of me also thinks that there is a product roadmap here. There's a technology story here as you listen to your office customers and the ones that are going to be leading on getting you onto a bigger and bolder opportunities.

What are you hearing strategy to the next generation of problems that present opportunities that could help you materialize the Tam to a greater degree than what you can do with your current product everybody and then I have one follow up question for Don Don. Thank you. So much sure. So cash I love. The question, what we hear from customers is there.

Excited about the data and the value of that data unlocks for them. So once they can see not just their GPS locations, but their safety profiles, how their equipment's performing how theyre doing in terms of compliance on the cloud they start to see ways to connect that data to other systems. So we have customers.

Sharing this data with their insurance providers using it for payroll.

We see all kinds of interesting integrations. So we now have over 155 integrations on our app marketplace and Thats, a number thats been growing year over year and when I talk to our largest most challenging customers. They are trying to find more ways to leverage that data and so part of that is about getting more data into the cloud. So the connected sites offering is a great example, they want data about their loading docks there.

Factories, and warehouses and remote sites and so that's one area that we've been investing is connecting more data into the connected operations cloud and then the second area is around integrations, and then and finding insights from that data. So training AI models looking at even more video I think I talked about a number 85 billion minutes of video in the cloud, we're able to find deeper and deeper insights.

That helps provide risk insights you'd.

Realization insights and so on so those are the two categories I would say, it's getting more data in the cloud and then unlocking more insights from that data and Thats an advantage, it's compounding plus the larger we get in terms of scale.

Wonderful. Thank you Sanjay one for you Tom as you look at your sales productivity.

Models are clearly the market opportunity is big and the value proposition is very clear.

Getting 50 plus percent of your net duration, you've you're back to the base rates retention rates.

Could the productivity to get even better.

Hi, my expectation that could be and the.

Couple that with your sales hiring in fiscal 'twenty three could we be our idea to use the word re acceleration we at a point, where the business could reaccelerate based on if then certain things that happen subject.

Subject to those conditions sales productivity or kind of net new ACD per sales rep per ramped up as one of the key metrics that we track internally and as that is moving up as sales reps are becoming more productive and that gives us a lot of confidence that we can go out and add more capacity.

That model and that is what we've seen since coming out of Covid as productivity has continued to improve and you can get a sense of that by just looking at our IRR per employee has continued to move up and so.

It's the reason we are going to add capacity into into your acceleration point.

Our overall head count was grew 30% almost 30% year over year in FY 'twenty, two and we plan to grow overall head count.

By by more than that in FY 'twenty three.

About half of our total employees are in our sales and marketing organization and I would expect that to be the same case as we as we move forward into FY 'twenty three so.

To that point, yes, I do think that the overall hiring will accelerate.

Brilliant thank you so much.

Our next question comes from Derrick Wood of Cowen followed by Matt at William Blair.

Great. Thanks, maybe.

Congrats from me as well.

Just wanted to stay on that line of thinking on the sales capacity.

What's been impressive is that you guys have been fairly constrained in capacity over the last year and yet you are heading these these great growth numbers, you're landing record new customers.

I'm curious what are the drivers behind the improvement in productivity is it partly because of just the growing demand out of the market.

And how much benefit you had from <unk>.

You guys were not as well known as you had to kind of push your way into deals and now that your brand awareness is better youre getting pulled more into rfps, how much is that a factor.

Yes, I do think that.

<unk> been selling for six years, where we were founded in 2015 through our seven year old company and.

As we mature as we as we went through the IPO a lot of these things are really tailwind to us we are taking more market share we are at.

Used to be the case, where maybe we would need to know about a dealer we'd get into it later.

Now that rarely happens we're in all of the Rfps and our customers are aware of us industry analysts are more aware of us and so.

That is definitely helping us with win rates and sales cycles.

Which is definitely contributing to the overall productivity improvements that we're seeing.

And if I can just add one thing I would say, we also have more people than industry practitioners, who are familiar with <unk>, who are recommending us to their peers in the industry. So we get more referrals as well. So I think thats, just something that time sort of yields for us.

Makes sense.

A question for you Sanjay.

I mean, you guys can serve ESG initiatives cutting carbon emissions with more efficient fleet operations. Just curious how often is ESG a driving force behind the company investing in Sam Sierra versus versus it being a nice derivative benefit and do you see ESG, becoming.

A bigger force of adoption, whether it be electrification or other new kinds of use cases that could.

That could be more of a driver.

Yes, Derrick I think you've put your finger on it ESG is becoming more front of mind for our customers, especially in the large enterprise. So we are starting to see the data from the Samsung platform appear in ESG reports as many of our customers are trying to quantify their carbon emissions and figure out how to hit their targets. We are seeing customers make that transition to electric vehicles that is a macro.

Trend that we've been preparing for and building tools for.

And there you will see us working with state and local governments, which is I think where we've kind of thought start a few years ago, but it is starting to occur across all these different vertical industry segment. So those are both they are on the sort of environmental side and then we are also seeing a lot of interest in workers' safety that is something in the world the physical operations, it's very front.

A mine for our customers our AI models that help keep drivers safe on the roads, it's being really well received and is part of that broader kind of ESG stance. So we are hearing it a lot, especially in large enterprise and we're also living it ourselves. So youll see an ESG report coming out from us in a few months and so ESG very much as a theme and it's.

I actually always been part of our story. If you think about the mission of the company, we're helping drive safety efficiency and sustainability and so.

We're excited to embrace that ESG trend and believe these this data in these tools that really helps.

Great Congrats.

Our last question today comes from Matt at William Blair.

Hey, guys. Thanks for taking my question just wanted to ask one.

On the businesses sensitivity to the price of oil so so with oil prices continuing to increase obviously it improves the ROI that your solution provides <unk> customers, but does that influence demand do you see a spike in demand at periods of time, where oil prices are on a rapid rise like they are now.

No Matt I would say this is Sanjay we don't see our demand directly correlated or connected to the price of oil now fuel spend is always been front of mind as an operating expense that and also our carbon emissions area that our customers would love to reduce and so we have a lot of tools that provide deep insights into.

Benchmarking of how you are performing how much youre using that sort of thing. So I do think as the price of fuel and oil in general increases that our customers are going to use this data more heavily to reduce their footprint, but it's not something where we see more telematics product or less telematics sold in conjunction with the price of a gallon.

Alright, Thanks, guys. Thanks, Matt.

So this concludes the question and answer portion. Thank you all for attending our Q4 fiscal year 2022 earnings call. It was a great conversation.

This past quarter capped off a very successful year for the company and reinforce the strength of Sam source connected operations cloud and continued customer Mentum. We're only getting started we look forward to updating you on our progress as we pursue the big opportunities that lie ahead before I, let you go out a few short announcements.

First we will be attending the Morgan Stanley Technology Media and Telecom conference in person on March 7th and the Wolfe Research software conference virtually on March 20 <unk>.

So we hope to see you again at one of those events second we are hosting our inaugural Investor day on June 14th in San Francisco. Please send an email to IR at <unk> Dot com, if youre interested in attending in person.

For those that prefer preferred to attend virtually our IR website will have a link to the live webcast.

Is it for today's meeting if you have any follow up questions. You can E mail us at IR <unk> com. Thanks, again bye everyone.