Q2 2024 Samsara Inc Earnings Call
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That's when the theory to the table.
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Good afternoon, and welcome to same stores second quarter fiscal 'twenty 'twenty four earnings call.
I might change I'm, sorry, as vice President of corporate development and Investor Relations.
Joining me today are Sam started Chief Executive Officer, and co founder of sand at Bayswater, 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 that same startup 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 are described more fully in our SEC filings.
Any forward looking statements that we make on this call are based on assumptions as of today August 31, 2023 and.
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 second quarter fiscal 2024 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 revenue and revenue growth record.
Reconciliations of GAAP to non-GAAP financial measures are provided in our press release and Investor presentation.
We will make opening remarks dimed highlights for the quarter and then open the call up for Q&A with that I'll hand over the call Center.
Thanks, Mike and thank you everyone for joining us today so.
<unk> achieved another strong quarter as we continued to deliver rapid ROI for the world's leading and most complex organizations. We ended Q2 with an era of 930 million growing 40% year over year.
Q2 was also our first adjusted free cash flow positive quarter, and we are proud to have achieved this milestone towards becoming a self sustaining business. Our vision is to be a multi decade partner for our customers and driving their digital transformation and profitability is an important step in that journey.
Our customers represent more than 40% of the global GDP and are the backbone of the global economy.
They are leaders in construction food and beverage transportation agriculture and field services.
In Q2, we saw continued momentum with large customers. We added a record 140 large customers, bringing us to over 500 customers with over $100000 near our growing 53% year over year.
This includes new Jersey transit National grid, and board long year, the world's leading provider of drilling services.
Our customer success are central to our company's success and we are grateful to earn their partnership and trust.
This past June we had a chance to celebrate our customers by bringing together nearly 1000 leaders from the largest physical operations organizations in the world and beyond our annual customer conference.
At the event, we learned more about the challenges, they're facing and discuss how Sam Sars connected operations cloud is delivering value through digitization.
It was a great opportunity to hear our customers top priorities, which is critical as we shape and prioritize our R&D efforts.
Throughout our conversations it was evident that the appetite for digital transformation is robust and growing.
We also held our connected operations award ceremony, where we celebrated our customers who achieved an outsize impact on our platform.
This year, we honored a number of industry leaders, including DHL are connected operations innovation winter and Soapies, our winner of most sustainable operations.
DHL is one of the largest logistics companies in the world serving more than 220 countries and delivering $1 7 billion parcels annually. They.
They have complex global operations and our frontline work force of 600000 people.
Using Samsung for safety in telematics across 20 sites DHL Express a 26% reduction in accidents, and a 49% reduction in accident related costs.
Equity is impressive DHL supply chain also saw a 50% reduction in driver turnover, reaching their lowest driver vacancy ever.
Driver turnover is a major cost for our customers and it's incredible to see the positive impact our products can have by helping companies enhance safety and improve retention.
Let's turn to Sogou <unk>, one of the largest supermarket chains in Canada with more than 200000 employees across 2700 locations.
They have ambitious sustainability goals with a go green target date of 2035 to substantially lower their emissions using Samsung. They served they saved 46000 gallons of diesel.
Leading to a savings of 469 metric tons of carbon emissions in just four months.
We really enjoyed our customer conversations throughout beyond and I'm excited to announce that next year, we will be hosting a conference in Chicago with even more customers partners and leaders across the world of physical operations.
A key priority for our customers is reshaping the worker experience. While there are millions of employees, who work in corporate back office, 70% to 80% of the world's workforce, our frontline workers saving frontline employees time with digital workflows and other technologies to modernize their experience can have an outsized impact for an organization.
A prime example of this is one of the largest air carriers in the world, which is using Samsung to digitize its ground support equipment operations across some of its major U S. Hubs. They are using our telematics and equipment monitoring applications to manage thousands of pieces of equipment from baggage carts to passenger boarding stairs anymore.
They have seen impressive results saving their employee's valuable time by helping them locate equipment often outside in all types of weather conditions in minutes instead of hours and.
In one hub alone they reported saving more than 2600 hours searching for ground support equipment.
And it's already impacting customer experience, they reduce delays and kickoff flights. The first flights of the day, which has a cascading impact on their operational schedule and customer experience. We are proud to help support their frontline teams and drive these results for their business.
Our customers Trust us as a strategic partner to make the jobs their frontline workforce better safer and more efficient.
At beyond we announced two new products to further empower their workers connected forms and mobile experience management.
Launching later this year connected forms allows customers to digitize any custom form such as inspections or incident reports and enables workers to complete them undergo.
The silver gates construction, a leading construction equipment transportation company used connected forms through an early access to streamline equipment inspections.
They have seen significant value already and reported 90% reduction in administrative time through eliminating the need to process paperwork.
You can read more about this exciting use case in our shareholder letter on our Investor Relations website.
Mobile experience management or M. M gives operations leaders the ability to easily customize control and secure devices for remote environments. Their frontline teams operate in.
<unk> logistics a final mile company.
Serving the eastern half of the United States has seen substantial improvements with EMEA.
Being able to more efficiently assist and train drivers remotely has resulted in our reported 80% reduction in average driver call types. They also reported a 70% reduction in data usage, while eliminating disruption for their drivers supporting their safety on the road.
As we build for the long term, we are investing in technology and talent that will drive value for our customers now and in the future.
We listened to our customers through our customer feedback loop and use those insights to deliver purpose built solutions that address their most pressing needs.
In addition to connected forms and M. M. This year and beyond we also announced three innovations to drive operational efficiencies virtual coach find my asset and data connectors.
Customer Centricity is central to our business I'm excited to bring an important new voice of the customer to <unk> board of directors with the appointment of Todd Blue door.
Todd brings nearly 30 years of leadership experience within the industrial sector, including 15 years, as Chief Executive Officer, and Chairman of Lennox International a leading global HVAC company and leadership roles at United Technologies, and Texas instruments.
He brings a deep understanding of our customers' needs and has a proven track record of execution and operational rigor, which will only enhance our ability to deliver for our customers. We are thrilled to welcome Todd to the board.
And finally I wanted to share that we were recently recognized by several organizations as a great place to work. We earned our 2023, great place to work certification. We're named a best workplaces for innovators by fast company and were named a 2023 U K 's best workplace for women with.
We are proud of creating a culture in our company that our employees enjoy working for.
It's been a milestone quarter for us at FEMSA, we're operating at scale have tremendous momentum fueled by customers, who find value in ROI on our platform and have taken an important step towards becoming a self sustaining business because of our continued focus on durable and efficient growth.
I would like to thank all of the <unk> customers partners and investors for joining us on this decade long journey.
I'll now hand, it over to Dominic to go over the financial highlights for the quarter.
Thank you Sanjay It Q2 was highlighted by achieving our first quarter of positive adjusted free cash flow. In addition to hitting this milestone in Q2, we expect to remain adjusted free cash flow positive for the full year and going forward.
This was also another quarter of high growth at scale, our year over year net new AOR growth accelerated for the second consecutive quarter, resulting in sustained high growth for both total <unk> and revenue.
In Q2, we added 74 million of net new <unk>, a quarterly record representing 33% year over year growth, which was our highest growth over the past six quarters. This also represented 32 percentage points of year over year growth acceleration out of larger scale.
Q2, ending <unk> with $930 million growing 40% year over year and revenue was $219 million growing 43% year over year, which is the same growth rate as last quarter at a larger scale.
Several factors.
Actors drove our strong topline performance first we continue to focus on serving large physical operations customers with complex operations that are more likely to utilize our full suite of applications. We now have 1515, 100, K plus a our customers, including a record quarterly increase of 104.
<unk> or 53% year over year growth, which is our third consecutive quarter of maintaining this growth rate at a larger scale.
100, K plus a our customers represent our fastest growing cohort.
In Q2 <unk> from these customers grew 53% year over year, representing the second consecutive quarter of accelerating year over year growth as.
As a result, 100, K plus a our customers contributed 50% of total a our mix up from 46% one year ago.
Second this quarter included a balanced mix of landing new customers and expanding existing customer relationships.
New customers represented approximately half of net new ACD and seven of the top 10 deals were new logos, including three that were greater than $1 million, one of which is a leading clean energy provider serving more than 20 million people in the northeastern United States.
Using C I'm, sorry, as EV features and sustainability dashboard, they're realizing hard and fast ROI by reducing the consumption of more than 10 million gallons of fuel per year.
Expansions to existing customers represented the other half of net new HCV, the largest of which was a more than 1 million dollar video based safety expansion to a critical infrastructure provider.
During the pilot phase the customer realized a 79% reduction in mobile usage events and a 50% reduction in speeding events. In addition to fewer accidents. This customer expects to lower insurance premiums improve asset utilization and reduce fuel costs, all with Sam Sarah.
And third while our core businesses drove most of our Q2 performance. We also executed well across several new Frontiers for example state and local governments.
And municipalities and school districts are becoming increasingly important end markets for Sam Sarah in Q2, we saw strong public sector momentum, including two of our top five new customers and two of our top five expansion deals.
In addition to public sector, we continue to see growing end market diversity in Q2, 84% of net new HCV came from non transportation verticals up from 78% in Q2 last year with particular strength in energy utilities construction and field services.
And lastly, we continue to see strength in non vehicle applications. We now have three separate products contributing more than $100 million of AOR, each and growing more than 30% year over year, including equipment monitoring used to locate and manage non vehicle assets in the field in Q2, we signed our largest ever.
<unk> monitoring deal and approximately $1 million expansion to a top 10 customer.
In addition to driving strong top line growth, we continued to deliver operating efficiency improvements across our business as we scale.
Q2, gross margin was 75% a quarterly record and approximately two percentage points higher year over year, driven largely by optimizing cloud cellular and customer support costs Q.
Q2, operating margin was negative 3% compared to negative 13% in Q2, FY2023 and Q2 adjusted free cash flow margin was positive for the first time at 2% or $5 million compared to negative 25% or negative $38 million in Q2, FY2023 primarily from improved operating leverage in <unk>.
<unk> working capital improvements.
Okay now turning to guidance for Q3, FY 'twenty four we expect total revenue to be between 223 and $225 million or between 31% and 33% year over year growth.
Based on our Q2 results and updated outlook for the remainder of FY 'twenty four we're raising our full year revenue guidance to be between 896, and 900 million or between 37 and 38% year over year growth.
As a reminder, our fiscal year always ends on the Saturday closest to February 1st which means every six years or fiscal year calendar includes 53 weeks instead of 52 as.
As such FY 'twenty four includes an extra week in Q4, resulting in 14 weeks instead of our typical 13 week quarter. We expect the extra week will add less than three percentage points of year over year growth in FY, 'twenty, four which was already factored into our prior guidance as well as the current guidance we provided today.
Additionally, we don't expect the extra week in FY 'twenty four will have a material impact on our key profitability metrics, because we will incur an additional week of expenses, while also recognizing an additional week of revenue.
To wrap up we are pleased with our performance through the first half of FY 'twenty four and our improved outlook for the remainder of the year. We are digitizing the world of physical operations, and helping our customers become safer more efficient and more sustainable with our markets products and customer focus we are well positioned to continue delivering durable and Fisher.
Growth with that I'll hand, it over to Mike to moderate Q&A.
Thanks, Dominic we will now open the lineup 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 Michael turn at Wells Fargo.
Okay.
Hey, guys. This is Chris <unk> on for Keith Weiss, Thanks for taking the question.
<unk> got really really great to see that largest ever equipment monitoring deal. So congrats on that what are what are some of the learnings that you have from selling telematics video safety into fleets that you can bring as you make more of a push on the monitoring side into industries like construction and public sector were mainly some sorry didn't have that initial.
<unk> name recognition like it does within the fleet side of things.
So Chris we're really excited to see that million dollar plus expansion in.
With equipment monitoring it is interesting to think about what lessons can we bring over one of the most fascinating things is a lot of these customers with huge numbers of assets in the field Didnt know that they can track all of that equipment and so it sounds kind of simplistic, but they thought GPS tracking was really limited to their over the road vehicles and Thats, often where we start.
So that expansion that we're talking about many cases, we'll start with telematics the lessons that we're able to bring over are really around ROI.
What are you doing in terms of understanding your asset utilization should you be remarketing, some of your assets or utilizing them differently and Tim mentioned construction.
Got it very helpful and then Dominic.
The new guidance for Q3 implies lower than normal kind of seasonal growth more of a backend loaded Q4 implied seasonal growth rate anything to call out there from a seasonality perspective.
I think similar to the <unk>.
<unk> foresee that we've used throughout the year I would frame our revenue guidance is derisked.
Is still macro uncertainty in front of us and we feel highly confident that this is the number that we're going to be able to hit I would also just again reiterate that the implied Q4 guidance includes an extra week.
In Q4, a 14 week quarter instead of 13 week and so that also will have an impact on the revenue growth in that quarter and therefore in Q3.
Excellent. Thank you.
Our next question comes from Michael churn at Wells Fargo, followed by Matt Pfau of William Blair.
Yeah.
Maria.
Okay, great. Thanks, so much appreciate you taking the question.
I mean, the second straight quarter roofing without divers results on net new E. R. R.
At the midpoint of the year I'm just wondering if there's anything you'd look back on as a key point of focus you had starting the year that may be helping drive some of the first half outperformance, we're seeing in any surrounding commentary coming out of the beyond event that we were at a few months back to just help support the continued momentum there.
Hey, Michael It's Dominic I think that the investments we've made over the last couple of years have really helped us get off to a really strong start in the first half of the year.
I think just the broader customer demand. The fact that we're able to provide hard and fast or why you know our customers operations budgets are generally increasing I called out two or three leaders are increasing their their operation technology budget.
But we've made a lot of investments in areas like large customers and back to back quarters of record adds and.
And we're seeing good balanced between new logos and expansions.
And then some of our newer frontiers.
Public sector, and we called out the equipment monitoring so those are investments we've been making for a couple of years and I think we're just seeing the continued momentum in those businesses over the first half of the year and if I can just add a couple of themes. We heard it beyond Dominic just mentioned large customer momentum we saw that.
Really come through and beyond in many of these large customers. They are complex physical operations and they're using this data that's now in our platform the system of record for their physical operations to connect into other systems. So that's another big tailwind. We have is this appetite for data and interest in getting more visibility and just to put a number on there connecting us into more.
Than six systems on average and so that's a really unique position that we have that I think is functioning as a tailwind for us in the market.
That's great and maybe just one on free cash flow you just had a big milestone there.
Some of the supporting commentary suggests guiding for breakeven effectively for the back half a year. We don't have much of a seasonal history to look back on it I know there are a lot of focus efforts put in the back half of last year to help get to the levels that you're currently operating at.
Anything you can comment on Dominic on the seasonal profile, we should expect from free cash flow going forward and how you think about the pace or trajectory.
Rectory, there now that you've reached the important milestone.
All of it obviously with free cash flow you know their stuff that happens at the end of quarters in the beginning of quarters I'd say its less seasonal are predictable as you know ratable revenue recognition and so.
We are strong strong free cash flow in the quarter and I think for the back half of the year. You know, we're seeing breakeven in that in the last few quarters, and we'll kind of see what we can do but our goal is really to focus on the full year and we feel confident that we're going to be free cash flow positive not only as we did in Q2, but for the full year as well.
Congrats on the strong first half thanks.
So our next question comes from Matt Pfau of William Blair, followed by Sterling Auty at Moffett Nathanson.
Yeah, Hey, Thanks for taking my question wanted to ask first on the seven of the top 10 deals that were from new customers I think that's up.
Very significantly from the first quarter, but if you were to look back historically, how does that mix compare and if it's op. What factors are driving that I mean I'm sure. It's some combination of signing larger customers as well as customers, making a bigger commitment upfront, but anything you would point to yes, I mean, I think if you go back to.
Q4, it was like more new logos than it was expansions and then in Q1, it flipped and 60% of our net new ACD came from expansions and now we're kind of at parity so kind of a 51% expansion is 49%.
New logos, so and again the way that we compensate our sales force, we just care about getting as much as we possibly can and they're compensated to drive overall net new ACD and whether that comes from a new logo or an expansion to an existing customer.
It's the same it's the same commission rate and so.
These things can be a little bit lumpy and which of those two are driving more of the net new ACD, but it's been pretty balanced over the last few quarters and and again, you're right a very strong new logo quarter for us.
Great and then just wanted to follow up on the gross margin in the quarter. Good to see that up I think the guidance implies that that would decline a bit in the back half of the year and any reason why you would expect that to decline in the back half.
Again.
There's timing implications of gross margins quarter to quarter I think we would just focus investors on the full year results were were steadily making progress and more and more leverage out of gross.
Gross margins are getting some optimizations around cloud and cellular and customer support, but the kind of the timing of when those expenses land within a year can fluctuate.
And again I would focus investors most of the leverage in this business going forward will come from operating expenses below below the gross margin line.
Great I appreciate it thank you thanks.
Our next question comes from Sterling Auty at Moffett Nathanson, followed by Kash Rangan at Goldman Goldman Sachs.
Alright. Thanks, guys can you comment to what you saw in terms of pipeline sales pipeline developments through the quarter and how does the kind of strength and maturity and health of that pipeline looked coming here.
The third quarter versus what you saw coming into the last couple of quarters.
I would say it did was it was pretty consistent obviously Q2 was a step up from a really strong Q1.
And conversion rates and pipeline generation and going all the way to things like free trials and the conversion of that end up in the bookings was was fairly stable and consistent.
And as we look in the back half of the year, especially coming off of our beyond customer conference.
We continue to see good pipeline and good customer demand.
And then just one question on the Tech stack you talk about the integration on the operation side.
Six additional systems at this point.
What what is the next key milestone that we should be looking at from the outside in terms of additional either integrations, our tech partnerships that you need.
Kind of drive the next level of adoption for the operations cloud outside the vehicle.
Okay.
I would say first of all we have over.
240 technology partners on our App marketplace. So these are integrations that.
Essentially work out of the box for our customers. There are always more that our customers ask us for as we continue to penetrate new vertical industries. Dominic mentioned public sector is an area that we've been investing in is going well.
As I meet with customers I always hear about a new piece of software they'd like us to connect with so I think we're still in that early phase of getting connected in getting this data to flow across systems as far as unlocks I think a lot of it comes down to helping our customers realize even more ROI from this data for many of them. This is the first big data initiative, they've had they're they've been in.
Business for decades in some cases, 50, or 100 years, but theyre not as familiar with using modern technologies using devices out in the field and getting reporting in the back office and changing their operations that way. So I think that unlock is showing them how to get even more value from this data.
Understood. Thank you.
Yeah.
Our next question comes from Kash Rangan at Goldman Sachs, followed by Jim Fish at Piper Sandler.
Hey, guys. This is Jacob on for Kash. Thanks, So much for taking the question a really really good quarter.
Just.
A couple from me one the large customer minimum large customer accounts saw.
There are pronounced momentum this quarter with another record quarter of ads is there anything to call out or anything to call out around that number and then can you touch on how many of those.
Large customers were existing versus versus versus new new customer adds and then another question around the sales force I believe in the second half of last year. It was mentioned that.
You start to bring on some additional sales capacity. So so those should be ramped by now I believe so maybe touch on how those.
New ramped reps are faring relative to expectations and anything to call out around that would be great.
Sure. So it's Dominic so of the 140, new 100, K plus customers I think roughly 60 or just under 60% were existing customers and a little bit more than 40% were new logos and.
In Q1, I think it was more like 70% were existing logos.
And in about 30% new so.
A little bit more new logo drivers of that 100, K plus additions, which is in line with.
That seven of the top 10 deals being new logos and obviously a lot of those being all of those being over 100 K. So.
Still pretty balanced, but a little bit stronger in terms of new logos this quarter.
In terms of the sales capacity, we definitely have been adding more and more sales capacity and really started that process in the middle of last year. It takes roughly roughly four or so quarters to ramp for a sales rep to become fully ramped and so we should have more kind of fully ramped capacity as we go into the back half of the year, we definitely saw.
Some benefit from adding extra capacity, even though it wasn't fully ramped in the quarter to go along with improved productivity.
Productivity again in the second quarter as we look into the back half of the year I think we're really.
Excited about the extra fully ramped capacity lending.
I think the question for US is just what does that do to overall productivity as you as you bring more and more people on your generally splitting accountants and cutting territories, and so really making sure that we're tracking the overall productivity will be important to to help us determine how to pace out hiring from from here, but.
We're looking forward to that in the back half.
Awesome. Thank you so much.
So our next question comes from Jim Fish at Piper Sandler followed by AG Zukin at Wolf.
Hey, guys, Jim nice quarter here.
Appreciate the details on the new versus existing base. When you look at your installed base here of roughly about 20000 customer core customers.
Where do you guys think your wallet share is to barrier or what kind of love to kind of penetrate overall and Don for you how should we be thinking about expansion rates in the back half of the year and how they looked actually in fiscal Q2 here versus last quarter.
Yeah. So I would say is that attrition is still relatively low when I look at the two largest expansions in the quarter.
Both of those were existing customers and they and they were licensing brand new products that they haven't used before and they were.
<unk> million dollars plus expansions and so I think generally the most of our expansions comes from customers rolling out more licenses across a broader set of assets, whether that's new new subsidiaries or new geographies and so to see them also come back and add additional products.
Was was that what was great to see and so I think there's obviously a lot of opportunity for us to continue to grow within our existing customers. While the retention rates again, it's been it's been fairly stable as we called out in the shareholder letter.
For Q2, we were ahead of our targets of 115% for core customers and 120% for.
For large customers paying more than a 100 K and so again almost 50 50 on expansions in new logos in that that continues to be a big part of our business.
It makes sense and just a follow up on the public sector and.
Announcements here understanding it was more on the on the state side and you guys have talked about this public sector opportunity for a little while obviously with.
This upcoming quarter or being the kind of federal budget flush I guess, what are you seeing in terms of interest level from the federal side of government at this point anything to add there. Thanks guys.
So Jim this is sanjay.
It turns out when it when you look at the physical operations addressable market for government. It is actually more centered in state and local because that's where a lot of these municipalities are kind of maintaining the roads and they're running the waste management services and so on so that's our primary focus is working with state and local agencies and you've seen that we announced.
The state of Tennessee earlier, we just talked about New Jersey transit. So that continues to be our focus at some point, we will continue to grow in deferred but the primary focus for us as sled or state and local as well as education, which includes K 12.
Great color great quarter guys. Thanks.
Our next question comes from Alex Zukin at Wolf, followed by G&A that tourists.
Hey, guys can you hear me okay, yes.
Perfect take first of all again, congrats on another great quarter as well as the materials presentation of the deck in the letter really insightful and helpful.
I guess, maybe just the first one I wanted to ask Jim Jim That's a really great question I want to ask it on a different slightly different cohort of customers, which is your largest customers I think one of the things that comes out is the level.
Strategic value that you are adding for kind of I think what some investors are considered non traditional customers for you guys. The airline that you called out as an example.
Like how big can your biggest customers get to and what evidence in those like million plus customers. If you look at obviously your net retention is higher than your larger customers today, but as you look at that wallet share potential and you think about how strategic you can ultimately become with the new offerings that youre launching.
How should we think about that and then I've got a quick follow up for Don.
Alex we're excited to be working with these large customers as we called out we now have over 60 customers that are over a million in IRR I think it's early in terms of penetration.
The use case that we highlighted earlier in the call with the airline and the equipment that is just one piece.
Piece of their operations and it's really very early in terms of the overall deployment footprint. So I think theres a lot of room to run in a lot of upside and we're just beginning to explore all the different possibilities to generate ROI for them.
Perfect and then.
It's rare to see the combination of net new IRR acceleration wells like sales and marketing expense growth Decelerates. So maybe is was there anything special unique onetime in nature.
Or are we now at that point, where from an incremental margin perspective, do you feel like at some level, you're going to start a new hiring cycle to take advantage of all the.
Opportunities youre seeing in the market or maybe just making sure we're kind of not missing anything there no youre not youre, not Michigan or anything it's just we're hitting on kind of both sides of this week.
We have been investing in more sales capacity and we're getting in that sales capacity is ramping and we're getting more productive are becoming more and more strategic for our customers, we're moving even more upmarket and driving grabbing more of that wallet share.
And that's allowed us to accelerate net new <unk> growth for the last two quarters at the same time, we're operating with a lot more efficiency and we are rapidly being able to get to free cash flow breakeven and positive now well ahead of expectations and.
Nothing one time to call out, but that is our focus going forward is sustaining high levels of growth and doing it as efficiently as possible.
Well good.
People have to keep it up so thank you guys.
Thank you thanks, Alex.
Next question comes from donate at tourists followed by Derrick Wood at Cowen.
Great. Thanks for taking my question just last week, you had the teamster Union ratified a new five year contract with UBS, which quarters in provisions that.
That would start the installation of driver facing cameras as they were increasing concerns about.
Surveillance from workers I was just curious.
Your thought process and if that causes any concern from your perspective.
As other companies might potentially stop installing safety devices and how do you address these privacy concerns with respect to your business, especially in geographies like Europe , which probably are a little bit more sensitive to this privacy issues.
Jeanine This is Sandra and I think that's an important topic to highlight first of all we talked about large customer momentum a little bit earlier, almost all of our large customers have some sort of relationship with labor unions, whether it's teamsters or others and so we're very familiar with working with.
The the unions themselves as well as alongside the employer to make sure that again the focus is on the safety aspects of things I think everyone wants workplace safety to be enhanced moving in the right direction, while preserving and maintaining privacy. So we're very transparent around what the devices do what the data is how it's preserved and who.
Access and visibility to it and we really try to have a joint and cooperative process. So we're again kind of to recap we're familiar with the concerns with unions and we tend to work hand in hand with them and we've seen it through in many deployments now of scale, where we get a significant buy them because they are interested in improving the safety out in the field for their.
Workers and that same sort of.
Motion theme carries over to Europe again every market is a little bit different but we see a lot of those same themes carrying out I think just even to tack on the in the.
Our prepared remarks had another example, like D. As Sanjay mentioned DHL supply chain saw a 50% reduction in driver turnover and so once these customers get the technology installed and they they realize.
Roy in a very quick period of time.
We can have a lot of success with this technology.
Thank you and just one follow up maybe for you on contract duration just wanted to see how that's trended and.
Are customers opting for maybe shorter contracts or has that held pretty stable over the last couple quarters.
Yes, it's been very stable, we signed three to five year subscriptions with with our customers and we haven't seen any change in that.
Great. Thank you.
Our last question today comes from Derrick Wood of Cowen.
Great. Thanks, So I wanted to touch on the the momentum building in state and local I'm just trying to.
I'd like to get a little bit more color on what's driving this inflection.
And I'm curious is it is it more dedicated resources that you've kind of put in market is it.
A bit more kind of a network effect and market recognition and starting to take hold or are there some dynamics in.
And those end markets that are driving more priority for digital transformation.
Looking to get a little more color behind the drivers here yes.
Yes, Derek it's Dominic I think you touched on two of the investments you've made one is around the go to market motion.
Our sales reps are horizontal across all industries, except for public sector. We have a dedicated team sales team that is very focused on just the public sector customers and that has.
An investment he started a couple of years ago and has really started to ramp up and is driving more of the productivity that we're seeing including in Q2 and the second one is the network effect that these customers tend to talk to each other and so when we can land and have success.
And then we're able to reference those customers with with other new prospects.
And that can drive a lot of success momentum and we're seeing both of those.
Great.
Maybe I'll ask on connected forms I guess.
It would be GAA sometime this year I saw in the <unk>.
Shareholder letter, some kind of beta users and Jim.
Better ROI stats behind that.
Just curious any more color on when it comes out what.
What you think could happen in terms of initial interest in <unk>.
Whether it could be more of a.
A needle mover for you in terms of revenue next year or may be something that takes longer to take hold.
So Derek this is sanjay.
This is kind of aligned with how we operate which is the spending time with our customers running that customer feedback loop and really understanding their operations to find other ways to help out.
Connected forms is something that we are seeing be very closely aligned with our core business are the same customers that are managing their fleets and thinking about safety are also thinking about other forms of workplace safety for example, being able to do Osha safety checklist.
I do.
Forklift safety and that kind of thing so that's going to be one area that we focus on I will say, though it's very early where this is going to be a GAA product at towards the end of the year and then it takes some time for us to build it up so we're excited about it but I don't think it's going to be huge revenue line in the coming year, but we are optimistic about it long term because there is.
So much pen and paper process out there in the world of physical operations in so many of these use cases, I think theres going to be compelling ROI for our customers.
Got it alright, congrats on another great quarter. Thanks.
So this concludes the question and answer portion. Thank you all for attending our Q2 fiscal year 2024 earnings call before I, let you go out a few short announcements.
We will be attending the Goldman Sachs Communica via conference in San Francisco on September 5th the Wolf Technology Conference in San Francisco on September six.
And the Piper Sandler growth Frontiers conference in Nashville on September 12, we hope to see you in person at one of these events. That's it for today's meeting if you have any follow up questions. You can email us at IR at <unk> Dot com. Thanks, again bye everyone.
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