Q3 2024 Samsara Inc Earnings Call
Yes.
[music].
Good afternoon, and welcome to <unk> third quarter fiscal 2024 earnings call I'm, Mike <unk>, Vice President of corporate development and Investor Relations joining.
Joining me today are Sam sorry, Chief Executive Officer, and co founder of <unk>, 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 <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 and are subject to risks and uncertainties described more fully in our SEC filings.
Any forward looking statements that we make on this call are based on assumptions as of today November 30th 2023.
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 third quarter fiscal 2024 financial results.
Wed 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 will discuss are non-GAAP, except for revenue and revenue growth.
Reconciliations of GAAP to non-GAAP financial measures are provided with the press release and Investor presentation.
We will make opening remarks, David highlights for the quarter and then open the call up for Q&A with that I'll hand over the call to <unk>.
Thanks, Mike and thank you everyone for joining us today.
I'm, sorry, I had another milestone quarter, we surpassed $1 billion near our growing 39% year over year.
We are a strategic partner for the world's leading and most complex physical operations organizations large customer momentum continues to fuel our growth and we added a record quarterly quarterly record of 148 customers with more than $100000 narrow this.
This represents our fastest growing customer cohort growing 49% year over year.
We also added a quarterly record of nine customers with more than $1 million near our seven fortune 1000 customers.
Our customers partner with us because we drive impact for them as part of our ongoing customer feedback loop, we meet with our frontline and back office workers to understand where they're getting the most value.
Here's what they say it sets us apart.
Our single platform for all of their operational systems.
Second our simple intuitive and easy to use technology. It just works out of the box and third our strategic customer partnership.
All of this together is what powers, our customers outcomes and helps deliver clear and fast ROI for their organizations I'd.
I'd like to share two examples of this.
Earlier this year, we announced a partnership with one of the largest air carriers in the world to digitize its ground equipment across major U S hubs.
This quarter, we partnered with another major airlines, the world's largest low cost carrier to help them their teams use equipment more efficiently and.
And avoid unnecessary spending we gave them visibility in their fleet utilization and help their employees located critical equipment in real time.
This decrease both maintenance times and costs and helped ensure planes were serviced based on results from initial pilot we estimate the airline can save more than $15 million annually from improvements in utilization fuel efficiency and operations.
Another example is one of the largest specialty contracting companies in the U S focused on construction services maintenance replacement fabrication and engineering services.
They are a top 10 customer and have had 19 expansions with us since 2018.
This quarter, they expanded with us again with <unk>.
Over $1 million video based safety deal <unk>.
Safety is one of their core values, the well being of their employees clients and subcontracting partners is fundamental to their success.
During the initial pilot the company averaged a 50% reduction in safety events when events for coach.
We are proud to drive these meaningful results and ROI and improve the safety efficiency and sustainability of our customers' operations.
And just eight years of selling we are operating at a rare combination of scale growth and profitability of.
Of all the U S listed software companies only seven including <unk> are at or above $1 billion in there are growing faster than 30% and free cash flow positive.
This demonstrates our commitment to execution and our strength in the market.
Looking forward, we believe we have the foundation to continue delivering durable growth and operating efficiency improvements.
First we are addressing a large market that is still in the early innings of digitization.
Physical operations represents more than 40% of global GDP.
The mission critical infrastructure that keeps the world running our.
Our customers are the world leaders in construction food and beverage transportation warehousing public sector agriculture and more.
Second we're building the only system of record for physical operations to address this market.
We pioneered the connected operations cloud connect.
Collect Iot data from a broad and diverse group of vehicles equipment sites workers and a growing ecosystem of connected assets and third party systems.
Third we aggregate all of this data into one common cloud our multi application platform continuously delivers applications to solve our customers' most challenging problems.
This unlocks an opportunity for us to continue selling and expanding with our customers.
Last our increasing scale and strong unit economics drive operational efficiency.
Q3 is the 14th consecutive quarter, where we've improved operating margins in dollars year over year.
While we are proud to have reached the $1 billion are milestone. We know that this is just a small step in our journey to transform the world of physical operations.
In front of US, we have a large and rapidly digitizing market.
We are scaling our multi product platform to address the needs of the world's most complex physical operations organizations.
And we have a strong foundation to build on with more than 19000 core customers more than 260 partners and thousands of stem science working in harmony.
The flywheel that is powering our business is accelerating as we convert our leading operations datasets into AI powered insights that amplify customer impact.
The first part of the flywheel is investing back in our platform, which has more than six trillion data points and 55 billion API calls over the last year.
We're focused on increasing operational datasets in our cloud.
There are many drivers that will continue to bring more data and including expansion to more asset types international growth and more ecosystem partnerships.
Second as we increased our unique unique dataset, we expect to deliver even more insights and solutions for our customers.
We pioneered a platform that is purpose built to capture and curate data adopt new models through our robust machine learning infrastructure and operating our cloud and at the edge with Iot devices.
All of this allows us to accelerate and expand AI powered insights for our customers.
Third more insights will drive more impact.
We have been delivering clear and fast ROI by partnering closely with our customers to understand their key operational pain points.
This also helps us understand how AI powered insights can make the jobs that their workers better and safer and how their operations can become more efficient and sustainable as.
As we look to the future our customer feedback loop will continue to unlock more applications such as co pilots risk centers and workflows to drive even more customer impact.
We're excited about the future and I'd like to say, thank you to all the customers <unk> partners and investors for supporting us on our journey to $1 billion narrower.
We're now operating at a rare combination of scale growth and profitability and we're just getting started.
As we scale towards our next billion and beyond we can look forward to the continued partnership with our customers on their Digitization journey I.
I can't wait to see the impact we'll make on their communities as we improve the safety efficiency and sustainability of their operations I'll now hand, it over to Dominic to go over the financial highlights for the quarter.
Thank you Sanjay Q3 was highlighted by several new records for important operating metrics and surpassing notable milestones first we surpassed $1 billion of <unk> and just our eighth year of selling the customers second this was our third consecutive quarter of accelerating year over year net new <unk> growth at a larger scale.
And third we achieved a quarterly record number of large customer additions with both 100, K plus and $1 million plus <unk> customers.
Fourth our video based safety in vehicle telematics products, each surpassed $400 million of <unk>, while still growing more than 30% year over year.
And lastly, we achieved our first quarter of positive non-GAAP operating profit led by a quarterly record non-GAAP gross margin Q.
Q3 was another quarter of sustained high growth at scale, our ending <unk> was 1.003 billion growing 39% year over year in Q3 revenue was $238 million growing 40% year over year.
Several factors drove our strong topline performance in Q3.
First we continue to focus on serving large enterprise customers to drive durable and efficient growth at scale. We now have 1663, 100, K plus AOR customers.
Orderly record increase of 148, representing 49% year over year growth. We also saw particular strength within our largest customers. We now have $71 million plus <unk> customers, a quarterly record increase of nine representing 54% year over year growth accelerating from 51% year over.
Year growth last quarter at a larger scale.
100, K plus <unk> customers also represent our fastest growing cohort and make up 51% of our total <unk> up from 47% one year ago.
And our land and expand strategy for large customers continues to pay off in Q3 four of our five largest net new ECB transactions were new logos, including three new million dollar plus <unk> customers that each landed with our three largest products video based safety vehicle telematics and equipment monitoring. Additionally.
Almost 60% of the 100, K plus AOR customer additions in Q3 were expansions to existing customers, allowing us to achieve our target dollar based net retention rate of 115, and 120% for core and large customers respectively.
Second our customers increasingly utilize <unk> as a system of record for physical operations by subscribing to multiple applications. All on one unified platform more than 90% of our large customers and 75% of our core customers subscribe to multiple application licenses.
As a result, our two vehicle based applications video based safety and vehicle telematics, each represent more than $400 million of <unk> and our largest non vehicle based application equipment monitoring which is used to locate and manage field assets is more than $100 million of IRR. In addition to large scale each of these product cat.
<unk> is growing more than 30% year over year.
Additionally, our largest transaction increasingly include multiple products in Q3 nine of our top 10 net new ACB deals included two or more applications, our largest new logo in Q3, a leading U S aggregates company with over 1000 on and off road vehicles and over 6000 field assets across more than 500 locations.
Landed with video based safety vehicle telematics and equipment monitoring partnering with Sam sorry, the customer is eliminating more than 50000 hours of manual reporting and data input work gaining insight into equipment utilization, providing safety coaching and saving millions of dollars on annual fuel spend.
Third we continued to demonstrate strong execution in several frontier markets, most notably 17% of net new HCV came from international geographies tied for our strongest quarter ever driven by strength in Mexico and Europe.
Additionally, our construction and public sector verticals each contributed their highest net new ACD mix over the last three years led by new customers such as the city of New Orleans, serving nearly 400000 residents and millions of visitors annually. This large municipality landed with video based safety vehicle telematics and equipment monitoring across.
41 city departments, including police fire public works code enforcement parks, and Parkway sanitation and more to proactively manage maintenance improve operational efficiency and safety and increased asset utilization.
And lastly, we saw strength in emerging products that provide additional expansion opportunities within our existing customer base mobile experience management or <unk> as a new software only product that allows customers to manage mobile devices in the field through features such as end to end visibility remote access and display customization.
Q3 was our first full quarter, selling <unk> and we've already crossed $1 million of R. R.
In addition to driving strong top line growth, we continued to deliver operating efficiency improvements across our business as we scale non-GAAP gross margin was 75% in Q3, a quarterly record and approximately two percentage points higher year over year, driven largely by optimizing cloud cellular and support costs non.
non-GAAP operating margin was positive for the first time at 5% compared to negative 10% in Q3 last year, an improvement of approximately 15 percentage points year over year.
And adjusted free cash flow margin was 4% or $9 million in Q3 compared to negative 9% or negative $15 million in Q3 last year, an improvement of 12 percentage points or $23 million year over year, primarily from improved operating leverage and continued working capital improvements.
Okay now turning to guidance based on our Q3 results and increased forecast visibility for the last quarter of the fiscal year, we're raising our revenue and profitability guidance, both in dollars and margin.
For FY 'twenty, four we're raising our revenue guidance to between 918 and $920 million or 41% 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 such FY 'twenty four includes an extra week in Q4, resulting in 14 weeks instead of our typical 13 week quarter. We expect the additional week will add approximately three percentage points of year over year growth in FY, 'twenty, four which was factored into our prior guidance as well as the updated guidance provided today. Additionally.
Additionally, we don't expect this will have a material impact on FY 'twenty for <unk> because sales quotas are consistently set regardless of the number of days or weeks in our fiscal quarter or year.
Similarly, we don't expect a material impact on our key profitability metrics because of additional expenses will be required to support the additional revenue.
In addition to increasing our top line guidance. We're also improving our FY 'twenty four non-GAAP operating margin guidance to approximately negative 1% or an implied operating income improvement of $18 million at the midpoint of guidance.
And we are raising our FY 'twenty four non-GAAP EPS guidance to between five and six and finally, we included a few additional modeling notes in our shareholder letter.
<unk>, we are pleased with our performance in Q3, and our 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 believe we are well positioned to continue delivering durable and efficient growth and with that I'll hand, it over to mark.
To moderate Q&A. Thanks.
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 Michael turn at Wells Fargo, followed by Matt Hedberg at RBC.
Hey, Great I appreciate you taking the question.
Just congrats on the clean results in terms of the international opportunity.
In a minute there there is commentary on the net new HCV there.
Coming in stronger than historical where are you can you just help level set where you are in terms of scaling some of those efforts.
How we should think about the investments required to enter into new territories, and how you think about the potential mix there.
Overseas overtime.
Yeah. So we're very focused in North America U S, Canada, Mexico, and then in some core markets within within Western Europe. We view this as a really important frontier for future growth and so we're investing accordingly.
These are really large markets and there are a lot of similar dynamics as what we see in the U S. In terms of physical operations customers with not a lot of visibility into their operations and so again, we're very focused on these markets over the over the long run and we're going to continue to invest and monitor results in productivity and efficiency and that will really gauge.
How we how we invest going forward.
Okay, and just on the quarterly record in terms of large customer activity is there any commonality or anything you can point to in terms of product. There is some good commentary on the diversification towards non vehicle and smart equipment up over $100 million, but just wondering if there's anything you'd call out in terms of the large deal momentum.
Yes, it's Dominic again look I just think it's really just consistent execution, we've really been investing.
In the enterprise segment for many years now and we're just we're seeing really good consistent execution and I'd call out and I mentioned in the prepared remarks that about 60% of those 100, K plus additions were expansions to existing customers. So within that you know the large enterprises, we're seeing more <unk>.
Expansion net new HCV.
But also.
When I look at the large deals in the quarter. There were a lot of new logos landing over $1 million as well, so really just a good balanced new customer and expansion mix.
Alright, our next question comes from Matt Hedberg of RBC.
All by Keith Weiss of Morgan Stanley.
Hey, guys can you hear me.
Yeah, We got you.
Great. Congrats from me as well the $1 billion threshold and the profitability are super exciting milestones I guess following up on the large deal success.
It's great to hear the equipment monitoring is also over $100 million, two and growing rapidly I'm curious on some of the newer lands are you seeing.
Fairly high attach for monitoring on sort of I imagine as part of a lot of Upsells, but are you starting to see even more sort of new customers come in and adequate monitoring right out of the gate.
Maybe I'll start and then Andrew if you have some color I know that there were.
Several large deals in the quarter, we called out specifically there were three new logos over a $1 million each.
All three of those included equipment monitoring so that's great to see historically, it really did come into play more as an expansion, but in some of these larger.
Customer transactions, where they're really looking to see them Sarah as a system of record across their operations. They're really examples of taking a lot of the platform upfront, yes, Matt if I could just add one or two things we mentioned some airline customers for them. It's primarily an equipment monitoring use case, where they have specialized pieces of equipment out on the airfield under the wing and Theyre trying to improve.
Utilization and understand where that equipment is so that's a great example of what an equipment monitoring lamp can look like and we do see that quite often.
That's fantastic Thanks for that and then Tom one for you.
You, obviously had a good quarter you raised guidance for the year you didn't comment on fiscal 'twenty, five and I'm curious as we sort of start to think about sharpening our pencils for next year on our modeling assumptions are there any.
Any details that you can share on maybe just guidepost for how we should think about fiscal 'twenty five initially.
Sure Yeah. So look at we need to get through Q4, obviously before we finalize our plan for FY 'twenty, five, but I'd say that based on our current outlook.
I think the initial FY 'twenty five revenue dollar range that we provide will be higher than the current consensus number given that we just be Q3, and we raised Q4.
And I would also frame that as as Derisked.
Thanks, a lot guys.
Thanks.
Our next question comes from Keith Weiss of Morgan Stanley followed by Cashing in of Goldman Sachs.
Hey, guys. This is Chris <unk> on for Keith Thanks for taking our questions and ill add my congrats too on the quarter.
Really exciting to see mobile experience management already crossed $1 billion <unk> given its a new product. So what do you think that says about your ability to launch and scaling your product and does this change how you view the opportunity with new products like connected forms on a go forward basis.
Yes, I'll take that one we were very pleased to see <unk>.
Startup line. So quickly I think we have a large base to work with and that's where we get a lot of our ideas and our product feedback from we're excited to be launching more products into our markets over time, but this was the strategy was to build out a platform build deep customer relationships and then continuing to scale with multiple products over time.
Got it that's very helpful and then Dominic.
Revenue growth of 40% was really strong, but I think net new <unk> growth of 20% year over year and down sequentially is a bit lower than the historical seasonality that you've seen in Q3. So just curious if there's anything you'd call out there.
Yes, I mean, I would just I would say it's important to remember that net new <unk> is seasonal so I would probably look at year over year comparison is probably more indicative of the performance in the quarter than quarter over quarter, but but maybe just even as a reminder, on the seasonality normally Q1 is generally our seasonally weakest quarter and then Q2 generally steps up from Q1, because we have.
Got a bunch of sales reps that are on semiannual quotas. So we see a bump up from Q1 Q3 tends to be flat flattish to Q2 and actually if you look back three of the last four non Covid years Q3, net new <unk> has been within $1 million of Q2, and then Q4 tends to step up and be our seasonally strongest quarter, because all of our sales reps.
Our quota period that ends in Q4, so I would just point back to Q3 net new a are flattish to Q2. It also accelerated.
For the third consecutive quarter and in Q4 is off to a good start.
Excellent. Thank you.
Our next question comes from cash at Goldman Sachs, followed by Derrick Wood at TD Cowen.
Okay Alright.
Unbelievable benchmark reached very few companies have been able to grow at that pace.
With some revenue and keep the momentum growing my question for you maybe.
Profits with century.
The non transportation mix of net new add R V.
Very high clearly the end markets.
Our diversifying and opening up in ways that at least I have not thought about.
What does that tell you about the Tam for the company because it's no longer just the fleet management telematics type.
Type opportunities something much bigger than that can you tell us how you think about the product strategy go to market strategy as the time really becomes something different and bigger than what.
At least I thought.
Which way it's going to be.
More telematics in vehicle related but it seems like your process workflow automation for many kinds of business process processes that.
That are outside of the core to me. Thank you. So much sure. So cash I think you are making a really important point, which is we are selling to the broader world of physical operations. They happen to have many fleet vehicles and so its been our kind of entry point or a foothold.
But we now work across companies in the world of construction energy utilities as I mentioned, some local governments. So it's way beyond kind of the typical or the.
Fleet market that people tend to imagine so that's been part of the strategy from the beginning which is to build out this broad platform.
We do see an opportunity to continue expanding with lines like connected equipment, which is now over $100 million in annual recurring revenue as you said non fleet products are now over 17% of our mix. So we would expect to see continued strength and growth there, but we are thinking much more broadly we're thinking about workflows, we're thinking about mobile experience management, and we're kind of trying to fight.
New ways to really connect our customers operations across more than just or.
<unk> fleet vehicles.
Fantastic congratulations thank you so much.
Our next question comes from Derrick Wood at TD Cowen followed by Alex Zukin at Wolf.
Alright.
Thanks, and congrats on another great quarter. Sanjay you guys had six trillion data points running through your platform I think I saw anything.
Update on what kinds of potential there is to train large language models with this data create new kinds of generative AI applications and how should we be thinking about the potential value for co pilots.
So it's an area we're investing in as you mentioned six trillion data points on the video side. We also see 44 billion minutes of video footage recorded by these dash cameras and then we have now third party ecosystem integrations as well so theres frankly, a lot of data to train on.
We've seen great results the training on some of that video footage for our AI based safety and now we're taking in that kind of a broader more holistic set of data to train generative AI models. The way, we think about it is again through the lens of the customer what's going to be practically useful for them out in the field can we speed up some of their workflows can we help them with things like dispatch in there.
Customer activities. So we're going to be continuing to train models. The way we have for the last several years with this increasing data asset that we're building, but we're going to be looking at it through a customer lens and say what else can we do for them.
Not just the technology lends regenerative AI.
Okay, Great and Dom.
So I mean, you guys have.
One of the highest growth rates in all of software really impressive.
And I think of kind of the algorithm underneath this is kind of a P times Q model sales capacity and sales productivity.
You got a lot of sales hiring last year.
Those new reps ramped quite a bit through this year, you've moderated your growth this year now to insinuate that.
Yes, maybe you've got some slower growth in productive sales capacity next year I guess, how do you think about this growth algorithm for next year and now that you are generating cash and continuing to see such good demand are you thinking about kind of pressing the gas a little bit more on hiring going into next year.
Yes, so I think that our we've done a lot of hiring across the company over the last.
One to two years.
And we've done a good job of ramping that capacity and making them productive and a lot of three consecutive quarters now of accelerating net new <unk> growth year over year as a result of adding additional capacity that has driven some of that I think going forward, we see a really large opportunity we're operating in a big Tam.
Physical operations again, it's 40% of global GDP and we think we're just we're just getting started so.
I do expect us to continue to make investments next year at a consistent pace and our goal is to operate within the guardrails of being free cash flow positive. We think about things like rule of 40 in terms of balance.
That we want to drive high levels of growth for as long as we can and we think we're set up well to do that.
Alright, congrats thanks.
Thank you.
Our next question comes from Alex Zukin at Wolf, followed by Matt Pfau of William Blair.
Hey, guys. Thanks for taking the question again, just virtually marvelous quarter I guess.
One thing that stood out to me was that four out of the five largest.
Customers in the quarter were kind of net new logos and lands in I guess.
Is there anything that youre seeing <unk> been operating at a pretty high rate of execution through what some would describe as a pretty challenging macro backdrop. So anything you sensed or saw in the quarter that kind of is changing that.
Maybe led to some some incremental momentum that youre starting to see them pick up on in the marketplace as a pure execution anything there kind of from a macro perspective, the comment on with respect to the business.
Hey, Alex it's Andrew we spent a lot of time out in the field talking to customers understanding their business I think there is a broader trend towards digitization, that's occurring and physical operations. These are folks with lots of assets lots of labor. They are trying to find ways to be safer more efficient more sustainable. So theyre now looking at tools like us and I think word is getting out.
This is a product that delivers very clear and fast ROI.
As far as what they're seeing in their businesses. Many of them have strong books of business, where they're booked out a couple of years in advance and so.
As we focus on these large complex physical operations customers I think there's more stability there than you might expect.
Maybe if you were to look at the other end of the market with smbs or something like that.
That's super helpful. And then as we think about next year.
Sure.
They're using it or Don Mike as you think about stack ranking the growth drivers can you maybe talk about just.
Where does pricing packaging, where does more verbalized products, maybe <unk> skus like what's the right way.
Hardware influence selling any of those kind of stack rank some of those more exciting opportunities that's going to drive the net new Aero next year.
Yes, maybe I can start I think for us, it's just going to be continued execution and I think we need to continue to roll out more and more products. We have a track record now three products over $100 million of IRR, all still growing really quickly and on top of that we're rolling out additional products that we think that we can we can sell under our.
Existing install base so.
Continue our product innovation will be key and then the other key driver for US is continuing to add sales capacity at a consistent rate, making sure that we're ramping that capacity and that theyre staying as productive.
As they were before and we think that we can continue to drive a lot of growth.
Perfect. Thank you guys congrats thanks.
Our next question comes from Matt Pfau of William Blair, followed by Daniel gesture of BMO.
Hey, guys. Thanks for taking my questions and I'll Echo my congrats on the quarter wanted to ask and I apologize for the multipart question, but about the win with the low cost carrier. So first was the win with the previous airline a factor in driving this win and then.
Prior airline I believe was just and a couple of airports is that the case with the low cost carrier and the previous airline win have you seen an expansion beyond the initial deployment within a few airports.
Sure, Matt I'll take that.
This is an interesting story, we held our customer conference Samsung beyond last June.
<unk>.
One of the airlines was on stage with Us and a few of the other airlines were in the audience and so I do think that folks are learning from each other they are seeing what others are doing in their industry and this idea of increasing asset utilization is really fundamental and physical operations. These are companies that have hundreds of millions sometimes billions of dollars of assets that are trying to figure out how to get the most bang for their buck.
So.
I think that's something where once you have a case study.
Sets the pattern and others kind of run with that same idea.
As far as the deployments I don't know off the top of my head I do know that one of the airlines has expanded with US recently I can't remember exactly which one.
Great and then just a quick question predominantly the gross margins I think you've been sort of guiding us to expect that to be down and it keeps going up how should we think about that going forward. Thanks.
Yeah look I think theres, some timing puts and takes within any given quarter with throughout our P&L and so I would just continue to focus investors on the kind of the full year.
Color that we provided in the in the <unk>.
A modeling notes.
We're really happy again quarterly record getting a 75%.
But most of the leverage I think in the model going forward in the out years will really come.
From below the gross margin line sales and marketing G&A, and maybe a little bit more out of out of R&D.
Perfect. Thank you. Thanks.
Our next question comes from Dan at BMO, followed by generic at tourists.
Great. Thanks for taking my question actually can we just follow up on that last one.
Al.
Sales and marketing expense and R&D, it's been really impressive that you've been able to keep those expenses.
That's down sequentially for the last couple of quarters and still to drive a.
Strong strength on the top line. So maybe just can you expand about sort of the ability to drive leverage on those expense items, yes.
Yes look I think there's always some timing stuff at play within within quarters I do expect that our overall opex.
Which decreased in Q3 will will will be higher in Q4, and you can see that in that we just had 5% operating margins in Q3, I'm guiding to 2% for for Q4. So I do think theres, a little bit of timing at play, but I just wanted to be clear we are definitely <unk>.
Investing.
And trying to sustain high levels of growth and so you may see some timing in the quarter to quarter.
Got you. Thank you and then.
As you continue to kind of expand.
<unk> kind of beyond the fleet.
Any update on how youre thinking about pricing model.
Those new product any evolution in kind of customer conversations or how youre thinking about going to market with price. Thank you.
So we've talked a little bit about connected forms and mobile experience management.
Some new products that we're experimenting with their I think the pricing model is going to be very similar to what we have where it's per asset per year or per user per year model, we're going to look at different ways to package. It just to make it easy for customers to adopt and consume the technology, but.
For us, it's really let's keep it simple and let's focus on the customer experience.
Great. Thank you very much.
Our next question comes from Geneva tourists, followed by Kirk maturing at Evercore.
Great. Thanks for taking my question.
I was just curious to get your thoughts on the SEC reporting requirements around emissions and weather.
Whether you think that could serve as a potential catalyst for your business going forward similar to the yield mandates some years ago.
Sure. So many of our large customers use our the connected operations data we provide in their ESG reports may do that today.
It makes their lives a lot easier because they can understand exactly on which field, they consume and wherever the operating and so on.
As those reporting requirements become a little more mature, we'll certainly integrate that into the product and I think it's going to be helpful for our larger public companies, but I don't know that its an E. L D tailwind that that would be much broader effect.
Thank you and just on the go to market front any update that you could provide us with now that Laura has been aboard for a couple of quarters as CFO.
Any change in strategy with respect to partners or any changes to your go to market organization.
No I'll say la has been doing a great job just getting up to speed. She has been out on the road with me a ton and customers have really enjoyed getting to meet her.
No big changes to announce I think continued focus on execution as Dominic highlighted earlier is kind of what we're focused on as a team and theres just a lot to do right now.
Great. Thank you very much.
Okay.
Our last question today comes from Kirk <unk> at Evercore.
Yes, thanks very much.
Tom I was wondering obviously you guys are now signing up a lot of customers with multiple products at the outset, which is which is great are those customers coming in and is that just still a subset of their equipment.
Inventory or are they now coming in when they have multiple products that they're using your system of record and starting at a larger size and scale is just kind of curious about that dynamic obviously.
It's very positive to kind of get the platform deal upfront just kind of curious if.
The expand from there is similar to a fade.
Decided to take on Tel metrics.
I think we're getting into some bigger lands upfront.
But I don't think that Thats.
The customers are landing wall to wall still the majority of the large customers.
We'll land with a subset of their their assets their vehicles or field assets, and then they'll they'll expand over time.
That continues to be the primary way that we see customers growing with US a lot of these customers have different operating segments and different decision makers and they grow through M&A and so there's a steady stream of expansions coming on as well and then I think that's indicative of just if you look at the net new ACB mix in the quarter, 51% came from new.
<unk>, 49% came from expansions to existing customers. So we tend to experience really good balance across both of those alright, and then just really quickly can you just talk about the momentum in the marketplace.
Just kind of curious what you're seeing obviously as your customer base gets bigger the opportunities for your partners in the marketplace gets bigger just anything that stands out to you in that dynamic.
Sure Kirk I think youre, referring to our App marketplace, yes, yes. So we have now over 260 partner integrations and it's really across a very wide range of.
Partnerships, so great momentum there customers are very much adopting those integrations turning demand. If you look at our larger customers the ones who are over 500 <unk>. They typically have six or more integrations that are active.
I think thats an area of continued pull in really differentiation, where the largest platform for.
For them in terms of these integrations so.
It's really about delivering more value for our customers and our partners love it because we make it easy.
Thank you all.
Thanks, Jeremy.
This concludes the question and answer portion. Thank you all for attending our Q3 fiscal year 2024 earnings call before I. Let you go over a few short announcements we will be participating in the Piper Sandler bus tour in San Francisco on December 4th SDN SDN Virtual bus tour on December 12, the William Blair Bus tour in San Francisco on December 12, the Goldman Sachs Buster and San Frisco in January.
Third and Evercore virtual bus tour on January <unk>, we hope to see you at one of these events.
That's it for today's meeting if you have any follow up questions. You can E mail us at IR at <unk> Dot com. Thanks again <unk>.
Goodbye.