Q1 2025 Samsara Inc Earnings Call
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Mike Chang: I'm incredibly excited for the future with us. Good afternoon, and welcome to Samsara's first quarter fiscal 2025 earnings call. I'm Mike Chang, Samsara's Vice President of Corporate Development and Investor Relations. Joining me today are Samsara CEO and co founder Sanjit Biswas and our chief financial officer Dominic Phillips.
Good afternoon, and welcome to <unk> first quarter fiscal 2025 earnings call I might change and Charles Vice President of corporate development and Investor Relations.
Speaker Change: Joining me today are Sam started Chief Executive Officer, and co founder Sandeep Biswas, and our Chief Financial Officer, Dominic Phillips.
Mike Chang: In addition to our preferred remarks on this call, additional information can be found in our shareholder letter, press release, investor presentation, and SEC filings on our Investor Relations website at investors.samsara.com. The matters we'll discuss today include four 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 filing. Any forward-looking statements that we make on this call are based on assumptions as of today, June 6th, 2024.
Speaker Change: 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.
Speaker Change: On our Investor Relations website at investors that Sam sorry Dot com.
Speaker Change: 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.
Speaker Change: Any forward looking statements that we make on this call are based on assumptions as of today June 6th 2024.
Speaker Change: And we undertake no obligation to update these statements as a result of new information or future events unless required by law.
Mike Chang: And we undertake no obligation to update these statements as a result of new information or future events unless required by law. During today's call, we will discuss our first quarter fiscal 2025 financial results. We'd like to point out that the company reports non-GAAP results in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Reconciliations of GAAP to non-GAAP financial measures are provided in our press release and investor presentation. We'll make opening remarks, dive into the highlights for the quarter, and open the call up for Q&A. With that, I hand over the call to
Speaker Change: During today's call, we will discuss our first quarter fiscal 2025 financial results.
Speaker Change: 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 of GAAP reckon.
Speaker Change: Reconciliations of GAAP to non-GAAP financial measures are provide in our press release and investor presentation.
Speaker Change: We will make opening remarks diamond highlights for the quarter and then open the call up for Q&A.
Speaker Change: I hand over the call to Sandra.
Sanjit Biswas: Thanks, Mike, and thank you, everyone, for joining us. Samsara had a strong Q1 of our new fiscal year as we continue to deliver durable and efficient growth. We ended Q1 with $1.18 billion in ARR, growing 37% year over. We are the strategic partner to the world's leading and most complex physical operations organizations. Large customer momentum continues to fuel our growth. In Q1, we had wins with the Department of Transportation in both Iowa and Kansas and Vinci, a Fortune Global 500 construction company with more than 275,000 employees.
Sandra: Thanks, Mike and thank you everyone for joining us today.
Sandra: <unk> had a strong Q1 of our new fiscal year as we continued to deliver durable and efficient growth. We ended Q1 with $1.18 billion and they are growing 37% year over year.
We are the strategic partner to the world's leading and most complex physical operations organizations large customer momentum continues to fuel our growth in.
Speaker Change: In Q1, we had wins with the department of transportation for both Iowa, and Kansas and Vinci, a fortune global 500, construction company with more than 275000 employees.
Sanjit Biswas: Our continued innovation and customer feedback loop drive our success with large customers. Over the past few months, I've visited many of our largest customers in the U.S., Canada, Mexico, and Europe. Seeing their operations firsthand, it's clear that the toughest challenges and priorities in physical operations are universal.
Speaker Change: Our continued innovation and customer feedback loop drives our success with large customers over the past few months I visited many of our largest customers in the U S, Canada, Mexico and Europe.
Speaker Change: Senior operations firsthand its clear that the toughest challenges and priorities and physical operations are universal.
Sanjit Biswas: First, these customers are operating at scale in an asset heavy and labor intensive industry. Second, these customers are using legacy point solutions where data is trapped in silos. And third, these customers are faced with common challenges, including fuel savings, workplace accidents, maintenance, and insurance. Across the board, our customers are investing in technology that helps them achieve safer, more efficient, and more sustainable operations. We are proud to partner with our customers on their digitization journeys. Recently, IDC surveyed 130 of our customers to assess the value of our platform.
Speaker Change: These customers are operating at a scale and asset heavy and labor intensive industries.
Speaker Change: Second these customers are using legacy point solutions, where data is trapped in silos and third these customers are faced with common challenges, including fuel savings workplace accidents maintenance and insurance.
Speaker Change: Across the board our customers are investing in technology that helps them achieve safer more efficient and more sustainable operations.
Speaker Change: We are proud to partner with our customers on their Digitization journeys recently IDC surveyed 130 of our customers to assess the value of our platform. The results are published in a white paper the business value of <unk>.
Sanjit Biswas: The results are published in a white paper, The Business Value of Samsara. The IDC research shows customers partner with us to be their system of record because we deliver clear and fast ROI. At the same time, we're helping customers achieve safety, efficiency, and sustainability. As one of our customers said to IDC, quote, "Samsara has opened up a whole new world for us. Every minute of efficiency gained is significant."
Speaker Change: The IDC research shows customers partner with us to be their system of record because we deliver clear and fast ROI at the same time, we are helping customers achieve their safety efficiency and sustainability goals.
Sanjit Biswas: Samsara is our most utilized company-wide business system and responsible for millions in savings at the bottom line. Looking more specifically at the findings, IDC estimated that Samsara customers realized more than an 8x ROI on average, representing $2 million of savings per customer per year. Samsara customers achieve these savings from reducing costs related to vehicle-related crashes and insurance, and spending less on fuel. Lower maintenance costs and extend vehicle lifespans, minimize lost revenue associated with vehicle availability, and increase driver productivity.
Speaker Change: As one of our customers said to IDC quote Sam Sarah has opened up a whole new world for US every minute of efficiency gains as significant FEMSA is our most utilized companywide business system and responsible for millions in savings and our bottom line.
Looking more specifically at the findings I D. C estimated that FEMSA customers realized more than an eight X ROI on average representing $2 million of savings per customer per year.
Speaker Change: So I'm sorry customers achieve these savings from reducing costs related to vehicle related crashes and insurance spending less on fuel.
Speaker Change: Lowering maintenance costs and extending vehicle lifespans, minimizing loss revenue associated with vehicle availability and increasing driver productivity.
Sanjit Biswas: We're proud to partner with our customers to help them drive meaningful impact in their organization. Our customers have large, complex operations that are asset and labor intensive. They often require tens of thousands of frontline workers and assets to build the infrastructure supporting our global economy.
Speaker Change: We are proud to partner with our customers to help them drive meaningful impact in their organizations.
Our customers have large complex operations that are asset and labor intensive they often require tens of thousands of frontline workers and assets to build the infrastructure supporting our global economy.
Sanjit Biswas: At this scale, our customers' top priorities are often safety and sustainability. It's critical to how they run their organization. I'd like to share two examples of how we're helping our customers meet their impact. The first is focused on safety with Nutrien Ag Solutions, the world's largest agriculture inputs and services provider.
Speaker Change: At this scale, our customers' top priorities are often safety and sustainability. It is critical to how they run their organizations.
Speaker Change: I'd like to share two examples of how we're helping our customers meet their impact goals.
Speaker Change: The first is focused on safety with nutrient AG solutions, the world's largest agricultural inputs and services provider.
Sanjit Biswas: They're using our video-based safety application to improve driver safety for their North American commercial. They've seen good results, as they reported in their most recent sustainability report. In 2023, they saw a 40% reduction in unsafe driving practices, including speaking, speeding, harsh braking, and distracted driving.
Speaker Change: They're using our video based safety application to improve driver safety for their North American commercial fleet. This.
Speaker Change: <unk> seen good results as they reported in their most recent sustainability report in.
Speaker Change: In 2023, they saw a 40% reduction in unsafe driving practices, including speaking speeding heartbreaking and distracted driving.
Sanjit Biswas: They use Samsara on more than 11,000 vehicles with plans to continue expansion. Our next example is sustainability with Frontier Communications, a top provider of broadband internet and digital television. They are using Samsara to optimize fuel efficiency and reduce fuel costs across their fleet. They installed our telematics application in 8,100 vehicles, saving them 320,000 gallons of fuel in 2023. This equals more than 6 million pounds of carbon.
Speaker Change: They use them sorry, more than 11000 vehicles with plans to continue expansion.
Speaker Change: Our next example is on sustainability with Frontier Communications, a top provider of broadband Internet and digital TV service there.
They're using FEMSA to optimize fuel efficiency and reduced fuel costs across their fleet.
Speaker Change: Installed telematics application and 8100 vehicles saving them 320000 gallons of fuel in 2023, this equals more than 6 million pounds of carbon.
Sanjit Biswas: Both of these organizations are taking a data-driven approach to help them achieve their ambitious goals and make the greatest impact. As we build for the long term, we will continue to invest in emerging products, our culture, and our customers as we scale and grow. First, we are seeing strong momentum in emerging products. We released our Connected Forms application into general availability last quarter. Our customers are excited to adopt it to improve their frontline workers.
Speaker Change: Both of these organizations are taking a data driven approach to help them achieve their ambitious goals and make the greatest impact.
Speaker Change: As we built for the long term, we will continue to invest in emerging products, our culture and our customers as we scale and grow.
Speaker Change: First we're seeing strong momentum in emerging products, we released our connected forms application into general availability last quarter. Our customers are excited to adopt it to improve their frontline worker experience connected forms is a workflow solution that allows our customers frontline workers to streamline their operations through digital forums.
Sanjit Biswas: Connected Forms is a workflow solution that allows our customers' frontline workers to streamline their operations through digital. Our customers are already finding value. A good example of this is with one of the largest privately owned drainage and wastewater utility specialists in the UK. Utility Service Provider, with more than 3,800 employees and 3,000, They've been a customer since 2020, starting with their video-based safety and telematics apps. This quarter, they expanded the partnership further with Connected Forum. Currently, they have more than 30 use cases for connected forms, including compliance, labor tracking, attendance, safety briefings, vehicle inspections, and avoiding timesheets.
Speaker Change: Our customers are already finding value a good example of this is with one of the largest privately owned drainage and wastewater utility specialists in the U K.
Speaker Change: Utility service provider with more than 3800 employees and 3000 assets.
Speaker Change: They've been a customer since 2020, starting with their video based safety and telematics applications. This quarter. They expanded the partnership further with connected forms.
Speaker Change: Currently they have more than 30 use cases for connected forums, including compliance labor tracking attendance safety briefings vehicle inspections, and avoiding timesheet fraud.
Sanjit Biswas: Their long-term vision is to have one system of record for their entire operation. This will enable them to manage all their data and extract insights and value from one unified platform. Second, focusing on our culture, Samsara has quickly become a destination for some of the world's top talent. This is critical as we scale our global team to support our rapidly growing customer base. We are proud to be certified by The Great Place to Work in the U.S., U.K., and Poland. This marks the second consecutive year of certification in the U.S. and the U.K. and a first-time honor in Poland.
Speaker Change: Their long term vision is to have one system of record for their entire operations. This will enable them to manage all of their data and extract insights and value from one unified platform.
Speaker Change: Second focusing on our culture FEMSA has quickly become a destination for some of the world's top talent. This is critical as we scale our global team to support our rapidly growing customer base. We are proud to be certified by the great place to work in the U S U K and Poland.
Speaker Change: This marked the second consecutive year of certification in the U S and the U K and a first time honor in Poland.
Dominic Phillips: We were also listed as number eight on Glassdoor's award list for the best-led companies in 2024. And lastly, we're looking forward to seeing many of you at BEYOND, our annual customer conference from June 26 to 28 in Chicago. At Beyond, we'll bring together thousands of leaders across physical operations to discuss the challenges they're facing and discover new ways to use Samsara. We will also be hosting Investor Day on June 27th in Chicago; we hope that you can join us.
Speaker Change: We were also listed as number eight on glass doors Award list for the best led companies in 2024.
Speaker Change: And lastly, we're looking forward to seeing many of you at beyond our annual customer conference from June 26 to 28 in Chicago.
Speaker Change: And beyond will bring together thousands of leaders across physical operations to discuss the challenges, they're facing and discover new ways to use Samsung we.
Speaker Change: We will also be hosting Investor day on June 27th in Chicago, We hope that you can join us.
Dominic Phillips: It was a great start to the new fiscal year. We want to thank our customers, partners, investors, and Samsarians across the globe for your shared commitment to increasing the safety, efficiency, and sustainability of the operations that power the global economy. We're excited about the year ahead. Now, I'll hand it over to Dominic to go over the financial highlights.
Speaker Change: It was a great start to the new fiscal year, we want to thank our customers partners investors and some signs across the globe for your shared commitment to increasing the safety efficiency and sustainability of the operation of the power of the global economy.
Dominic Phillips: We're excited about the year ahead, I'll now hand, it over to Dominic to go over the financial highlights for the quarter. Thank you Sanjay we delivered strong Q1 results highlighted by sustained high growth at scale and continued operating efficiency improvements, including maintaining the same revenue growth rate as last quarter at a larger scale and quarterly records for both gross <unk>.
Dominic Phillips: Thank you, Sanjit. We delivered strong Q1 results highlighted by sustained high growth at scale and continued operating efficiency improvements, including maintaining the same revenue growth rate as last quarter at a larger scale and quarterly records for both gross margin and adjusted free cash flow margin. Our durable and increasingly efficient growth demonstrates the large and growing opportunity for digital transformation across the world of physical operations. And regardless of the broader economic environment, our business has continued to be incredibly resilient and deliver consistent results due to a few key reasons.
Dominic Phillips: Arjun and adjusted free cash flow margin.
Dominic Phillips: Our durable and increasingly efficient growth demonstrates the large and growing opportunity for digital transformation across the world the physical operations and regardless of the broader economic environment. Our business has continued to be incredibly resilient and deliver consistent results due to a few key reasons.
Dominic Phillips: First and most importantly, our products create real hard ROI for customers, including reducing accidents, lowering insurance premiums, generating fuel savings, lowering maintenance costs, and improving asset utilization. And our customers' payback period is very quick, often measured in months. Second, we primarily sell into a different budget than many other enterprise software companies. The operations budget is generally larger and less discretionary for our customers.
Speaker Change: First and most importantly, our products create a real hard ROI for customers, including reducing accidents, lowering insurance premiums generating fuel savings lowering maintenance costs and improving asset utilization and our customers' payback period is very quick often measured in months.
Speaker Change: We primarily sell into a different budget than many other enterprise software companies. The operations budget is generally larger and less discretionary for our customers and third we are a subscription business model that produces highly predictable revenue and we price most of our subscriptions based on the customer's number of physical assets instead of head count based pricing.
Dominic Phillips: And third, we have a subscription business model that produces highly predictable revenue, and we price most of our subscriptions based on the customer's number of physical assets instead of headcount-based pricing, which results in lower ACV risk if our customer's hiring slows or contracts. Q1 ending ARR was 1.18 billion, growing 37% year over year. Within this, we added 74 million of net new ARR, representing 21% year over year growth
Speaker Change: Which results in lower a CV risk if our customers hiring slows our contracts.
Speaker Change: Q1, ending RR was 1.18 billion growing 37% year over year within this we added 74 million of net new <unk>, representing 21% year over year growth.
Dominic Phillips: Q1 revenue was $281 million, growing 37% year-over-year, which is the same revenue growth rate from last quarter when adjusting for the extra week in Q4, but on a larger scale. Several factors drove our strong top line performance in Q1. First, we continue to focus on serving large enterprise customers to drive durable and efficient growth at scale. We now have 1,964 100k plus ARR customers, representing 43% year-over-year growth. We also grew our average ARR per 100k plus customer from 305,000 in Q1 last year to 316,000 in Q1 this year.
Q1 revenue was $281 million growing 37% year over year, which is the same revenue growth rate from last quarter when adjusting for the extra week in Q4, but at a larger scale.
Dominic Phillips: The combination of more customers added and an increase in the average ARR per customer grew our ARR mix for 100k plus ARR customers to 53% in Q1, up from 49% one year ago and 45% two years ago. Second, our customers increasingly utilize Samsara as a system of record for physical operations by subscribing to multiple applications, all on one unified platform.
Speaker Change: Several factors drove our strong topline performance in Q1 first we continue to focus on serving large enterprise customers to drive durable and efficient growth at scale. We now have 1964, 100, K plus AOR customers, representing 43% year over year growth. We also grew our average.
Speaker Change: Our our per 100, K plus customer from 305000 in Q1 last year to 316000 in Q1. This year the combination of more customers added and an increase in the average <unk> per customer grew our <unk> mix for 100, K, plus a or our customers to 53% in Q1 up from 49.
Speaker Change: Percent, one year ago, and 45% two years ago.
Dominic Phillips: 94% of our 100k plus ARR customers and 83% of our core customers subscribe to multiple Samsara products. We're also seeing multi-product adoption at scale. Our two vehicle-based applications, video-based safety and vehicle telematics, each represent more than 450 million ARR, and our largest non-vehicle-based application, equipment monitoring, which is used to locate and manage field assets, is doing more than 125 million ARR.
Speaker Change: Second our customers increasingly utilize him Saar as a system of record for physical operations by subscribing to multiple applications all on one unified platform.
Speaker Change: 94% of our 100, K plus a are customers and 83% of our core customers subscribe to multiple Samsung products.
Speaker Change: We're also seeing multi product adoption at scale are two vehicle based applications video based safety and vehicle telematics each represent more than $450 million of era, and our largest non vehicle based application equipment monitoring which is used to locate and manage field assets is doing more than $125 million of IRR.
Dominic Phillips: In addition to large scale, each of these product categories continues to grow more than 30% year over year. We also saw a number of large multiproduct transactions in Q1. All of the top 10 new logos in Q1 included two or more products for the first time since our IPO. And nine of the top 10 expansions included two or more.
Speaker Change: In addition to large scale each of these product categories continued to grow more than 30% year over year.
Speaker Change: We also saw a number of large multi product transactions in Q1, all of the top 10, new logos in Q1 included two or more products for the first time since our IPO and nine of the top 10 expansions included two or more products.
Dominic Phillips: One of our largest Q1 transactions was an expansion to one of the largest U.S. telecom companies. This top 20 customer landed back in FY23 with vehicle telematics only as a greenfield opportunity. After achieving significant efficiency improvements and fuel savings, they signed a more than $1 million expansion this quarter, which included more telematics licenses and the addition of video-based safety to a subset of their total vehicles. During the pilot, the customer saw a 62% reduction in safety events and a 92% decrease in mobile usage.
Speaker Change: One of our largest Q1 transactions was an expansion to one of the largest U S. Telecom companies. This top 20 customer landed back in FY2023 with vehicle telematics only as a greenfield opportunity.
Speaker Change: After achieving significant efficiency improvements in fuel savings they signed a more than $1 million expansion. This quarter, which included more telematics licenses and the addition of video based safety to a subset of their total vehicles.
Speaker Change: During the pilot the customer saw a 62% reduction in safety events and a 92% decrease in mobile usage.
Dominic Phillips: After this initial rollout, we expect the customer to add more licenses across a broader set of vehicles over time. And the strength and expansions have also allowed us to achieve our target dollar-based net retention rate of 115 and 120% for core and large customers, respectively. Third, we demonstrated strong execution across several frontier markets. First, a quarterly record 18% of net new ACV came from international geographies in Q1, driven by strength in Mexico and Europe, which contributed its highest ever quarterly net new ACV mix.
Speaker Change: After this initial rollout we expect the customer to add more licenses across a broader set of vehicles over time.
Speaker Change: And the strengthened expansions also allowed us to achieve our target dollar based net retention rate of 115, and 120% for core and large customers respectively.
Speaker Change: Third we demonstrated strong execution across several frontier markets first a quarterly record 18% of net new HCV came from international geographies in Q1, driven by strength in Mexico, and Europe, which contributed its highest ever quarterly net new HCV mix.
Dominic Phillips: Second, the construction vertical drove the highest net new ACV mix of all industries for the third consecutive quarter, and field services had the second highest mix. In total, 87% of Q1 net new ACVs came from non-transportation verticals, an increase from 82% in Q1 last year. And lastly, we also saw strength in emerging products. In Q1, we signed the city of Pittsburgh as one of our largest new logos for the quarter. In addition to landing with vehicle telematics and equipment monitoring, they also included mobile experience management and connected forms in their initial transaction.
Speaker Change: Second the construction vertical drove the highest net new ACD mix of all industries for the third consecutive quarter and field services had the second highest mix in total 87% of Q1 net new a C. V came from non transportation verticals and increased from 82% in Q1 last year.
Speaker Change: And lastly, we also saw strength in emerging products in Q1, we signed the city of Pittsburgh as one of our largest new logos in the quarter. In addition to landing with vehicle telematics and equipment monitoring. They also included mobile experience management and connected forms and their initial transaction.
Dominic Phillips: We also signed a more than 250K connected forms expansion with one of the UK's leaders in water and wastewater services. And an existing top 50 customer, one of the country's largest food distribution providers, signed a 400K site visibility expansion. In addition to driving strong top-line growth, we continue to deliver operating efficiency improvements across our business as we scale. Non-GAAP gross margin was a quarterly record 77% in Q1, approximately four percentage points higher year-over-year, driven largely by optimizing cellular, customer support, and warranty costs.
Speaker Change: We also signed more than 250 K connected forms expansion with one of the Uk's leaders in water and wastewater services and an existing top 50 customer one of the country's largest food distribution providers signed a 400 K site visibility expansion.
Speaker Change: In addition to driving strong top line growth, we continued to deliver operating efficiency improvements across our business as we scale.
Speaker Change: non-GAAP gross margin was a quarterly record 77% in Q1, approximately four percentage points higher year over year, driven largely by optimizing cellular customer support and warranty costs.
Dominic Phillips: Non-Gap Operating Margin was 2% compared to negative 9% in Q1 last year, driven by leverage across all functions, and adjusted free cash flow margin was a quarterly record 7% in Q1 compared to negative 1% in Q1 last year. Okay, now turning to guidance. Because of our strong Q1 performance and outlook for the rest of FY25, we're raising our guidance across all key metrics. We've also analyzed various scenarios and believe that this guidance is adequately de-risked to account for the potential impact of worsening macroeconomic factors on our business. For Q2 FY25, we expect total revenue to be between $288 and $290 million, representing year-over-year growth between 31 and 32 percent, and the non-GAAP operating margin to be approximately negative 2 percent.
Speaker Change: non-GAAP operating margin was 2% compared to negative 9% in Q1 last year driven by leverage across all functions and adjusted free cash flow margin was a quarterly record 7% in Q1 compared to negative 1% in Q1 last year.
Speaker Change: Okay now turning to guidance because of our strong Q1 performance and outlook for the rest of FY 'twenty five we're raising our guidance across all key metrics. We've also analyzed various scenarios and believe that this guidance is adequately derisked to account for the potential impact of worsening macroeconomic factors on our business.
Speaker Change: For Q2, FY 'twenty five we expect total revenue to be between 288 and $290 million representing year over year growth between 31, and 32% non-GAAP operating margin to be approximately negative, 2% and non-GAAP EPS to be between zero and one cent.
Speaker Change: For full year FY 'twenty five we expect revenue to be between one point to zero five and one point to one 3 billion representing year over year adjusted revenue growth between 31, 32%.
Okay.
Speaker Change: Yes.
Speaker Change: Thanks.
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Dominic Phillips: So to wrap up, we are pleased with our start to the year and our input outlook for FY25. We do want to sustain our revenue growth rate at a larger scale while also achieving our record free cash flow margins. We are now operating in a rarefied era in terms of scale, growth, and profitability. CSR is one of only two public companies, software companies, at more than $1 billion in scale, expected to grow more than 30% this year, and generating positive free cash flow.
Speaker Change: Yeah.
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Dominic Phillips: Looking forward, we believe we're well-positioned to continue delivering durable and efficient growth because we're digitizing the world of physical operations, which is a very large and underserved market opportunity, and that's driving strong customer demand. Our products offer real ROI in a fast payback period, and we're targeting a very different operational budget. We're proud to partner with our customers, and we're excited to continue helping them operate more safely, efficiently, and sustainably. And with that, we'll hand it over to Mike for the Q&A.
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Dominic Phillips: Thank you, Dominic. We'll now open the line up for questions. Please use your term and send your questions in one question at a time. The first question today comes from Keith Weiss on Montessori, followed by Aleksandr Zukin. Hey guys, this is Christopher Quintero. I'm here with Keith.
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Speaker Change: Tony.
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Unknown Executive: Thanks for taking my questions and congrats on the quarter. I wanted to ask about connected forums, ranging from the CIU 30 customer. I've run 30 use cases for it, but things have gone out of hand and really stood out to me. So, can you walk us through how that customer identified all those use cases and how you apply that process, and relatedly, how many workers is that product touching with those 30 use cases?
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Speaker Change: And we're excited.
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Speaker Change: Sure.
Speaker Change: Thank you.
Speaker Change: Two questions.
Unknown Executive: The simplest way for customers to see where they can use forms is to look at where they're still using pen and paper in their workflow. For example, for many of our customers, they have safety checklists they perform before getting started on their day. It might be a forklift inspection or some kind of site inspection. Some of them have delivery forms that they use when they visit a customer, and many of them have other kinds of compliance paperwork.
Good question.
Speaker Change: Good question.
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Unknown Executive: So we often see dozens of different forms of pen and paper out in the customer environment, and that's something that thousands of frontline workers have to fill out every single day. So it's a tremendous opportunity for us. And it also is something that's really strengthened by our system of record approach, because we have a lot of contextual information about where that person is filling out that form, what asset they may be inspecting, and what the mileage on that asset may be. So there is a lot that we can do in terms of connecting all this data together.
Speaker Change: Okay.
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Speaker Change: And the simplest way for customers to see where they can use forms is to look at where they are still using pen and paper and their workflow. So for many of our customers. They have safety checklist. They performed before getting started in their day that might be a forklift inspection or some kind of site inspection.
Speaker Change: Some of them have delivery forms that they have when they visit a customer and many of them have other kinds of compliance related paperwork. So we often see dozens of different forms of pen and paper out in the customer environment and that's something that thousands of frontline workers have to fill out every single day. So it's a tremendous opportunity for us I'd also is something that's really strength.
Dominic Phillips: Yeah, I mean, I'd start off by saying, you know, we're really pleased with how FY25 got off to a good start. And, you know, we achieved 37% revenue growth in Q1, which, again, is the same growth rate that we did in Q4 last quarter, but obviously at a larger scale, so no sequential decline. And we were also able to pass through 2x the amount of the Q1 beat through to the full-year guide, which I think is very indicative of our outlook.
Speaker Change: And by our system of record approach because we have a lot of contextual information about where that person is filling out that form what asset they may be inspecting what the mileage on that asset may be so there's a lot that we can do in terms of connecting all this data together.
Speaker Change: Got it that's super helpful. Sanjay.
Dominic Phillips: And I did, you're right, I mentioned on the last call that our guidance is going to be less conservative this year than it was during our first two years, you know, post IPO, because we obviously have more forecast predictability. But I'd say beyond that, I'd really continue to point investors to ARR as a better indicator for the performance in the quarter, because like all subscription business models that have routable revenue recognition, only a small percentage of our Q1 revenue actually came from Q1 bookings.
Speaker Change: And then one for Dominic I know you've been signaling that the magnitude will be coming down and you stood at about 3% of revenue Pete is that the right type of magnitude investors should be expecting for the rest of the year.
Speaker Change: Yes, I mean, I would just first start off by saying, we're really pleased with how FY 'twenty five got off to a good start and we achieved 37% revenue growth in Q1, which again is the same growth rate that we did in Q4 last quarter, but obviously at a larger scale. So no sequential diesel and we were also able to pass through a two X the amount of the Q1 beat.
Aleksandr J. Zukin: The next question today comes from Aleksandr Zukin with Wolf, followed by Matt Hedberg with RBC.
Dominic Phillips: Hey guys, thanks for taking the question and for being one of the few Beat and Raise companies this earnings season. Maybe just the first one, just the tail of the tape for the quarter. What was linearity like in the quarter? Was it any different than when maybe you saw it this time last year? And outside of what you called out in the shareholder letter, maybe anything outsized in terms of areas of strength that drove the outperformance?
Speaker Change: Through to the full year guide, which I think is very indicative of our outlook.
Speaker Change: And I did you write I mentioned on the last call that our guidance is going to be less conservative this year than it was during our first two years post IPO, because we obviously have more more forecast predictability.
Speaker Change: But I'd say beyond that I'd really continue to point investors to <unk> is a better indicator for the performance in the quarter because like all subscription business models that have ratable revenue recognition only a small percentage of our Q1 revenue.
Dominic Phillips: Hey Aleks, it's Dominic. Yeah, so the linearity in Q1 looked very similar to other quarters, like most enterprise software businesses. Month one and month two tend to be lighter in terms of linearity, and then the majority of the bookings tend to happen in the third month. And so for us, month three was April, which was our strongest month in the quarter, and so there was no real change in linearity. And again, I think for us, for Q1, there was a lot of strength that drove the top line performance, as we called out.
Speaker Change: Actually came from from Q1 bookings.
Speaker Change: Excellent. Thanks, so much.
Speaker Change: The next question today comes from Alex Zukin, with Wolfe, followed by Matt Hedberg with RBC.
Aleksandr J. Zukin: Hey, guys. Thanks for taking the question and for being one of the few being raised companies this earning season.
Speaker Change: Maybe just the first one just the tail of the tape for the quarter what was linearity like in the quarter was it any different than what maybe you saw this time last year and outside of what you've called out in the shareholder letter maybe anything outsized in terms of areas of strength that drove the outperformance.
Dominic Phillips: It was a really strong, large customer quarter. We had a lot of multi-product transactions that drove a lot of our net new ARR strength. And then some of these emerging frontiers where it was a record quarter for international. We called out a number of these kind of new products that are driving strength, and then we saw a pretty diverse mix of ARR across different industry verticals as well, and I'm sorry, and obviously record gross margin and record free cash flow margin.
Dominic: Hey, Alex had said Dominic yeah. So the linearity in Q1 looked very similar to other quarters like most enterprise software businesses.
Dominic: At month, one month, two tend to be lighter in terms of linearity and then and then the majority of the bookings tend to happen in the third month and so for US monthly was April which was our strongest month in the quarter and so no real change on on linearity and again I think for US for Q1. There was there was a lot of strength there that drove the top line.
Dominic Phillips: And then maybe just as a follow-up, if I look at the net ads this quarter, really solid at 116, you know, what's the takeaway from that? It's a little lower for the 100k customers, it's a little lower than last year's kind of cadence, but is that, is there any kind of incremental macro, you know, hesitancy that's maybe shifting things, you know, more seasonally to the back half or qualify that number, if you can?
<unk> as we called out it was a really strong large customer.
Dominic: Quarter, we had a lot of multi product transactions that drove a lot of our net new <unk> strength and then some of these emerging frontier is where it was a record quarter for international.
Dominic Phillips: Yeah, no, I think you've got to look at both sides of this, not only the number of 100k plus additions but also the average ARR per 100k plus customer increased to 316k this quarter versus 305k in Q1 of last year. Last year, the average ARR per customer was flat, 0% growth versus the prior quarter; this quarter was up 4%. And so we more than offset the number of 100k plus ads by increasing the average size per customer. And you can see that result in the ARR mix from large customers increased to 53% this quarter, up from 52% last quarter and 49% a year ago.
Dominic: We called out a number of these kind of new new products that are that are driving strength and then we saw a pretty diverse.
Dominic Phillips: Got it. Perfect. Thank you, guys.
Dominic: Mix of of <unk> across different industry verticals as well.
Speaker Change: And I'm, sorry, and then obviously record gross margin and record free cash flow margin.
Speaker Change: And then maybe just as a follow up if I look at the net adds this quarter really solid at 116.
Speaker Change: What's the takeaway from that it's a little lower for the 100 K customers total lower than last year's kind of cadence, but is that is there any kind of incremental macro.
Richard: Hesitancy, that's maybe shifting things more more seasonally into the back half or qualify qualify that number Richard Yeah. No I think you've got to look at both both sides of this not only the number of hundred K plus additions, but also that the average <unk> per 100, K plus customer increased to 316 K this quarter versus 305 K in Q&A.
Unknown Executive: So it looks like Matt put his hand down. So the next question goes to Derek Wood with TD Cowan, followed by Jacob Staffel with Goldman Sachs.
Unknown Executive: Great, thanks. This is Colin speaking on Derek's behalf. First, I was just looking for an update on the macro and seeing if you know you guys are seeing any sort of sales cycle changes now versus last quarter or last year.
Richard: Last year last year, the average <unk> per customer was flat zero percent growth versus the prior Q1. This quarter. It was up 4% and so we more than offset the number of 100, K plus ads by increasing the average size per customer and you can see that result in the a or our mix from large customers increased to 53% this quarter.
Sanjit Biswas: Sure, I'll take that. This is Sanjit.
Sanjit Biswas: No major changes from what we saw 18 months ago. That's when sales cycles started to elongate, but they haven't gotten materially shorter or longer. I've spent a lot of time out on the road with customers, not just here in the U.S., but in Canada, in the UK, sorry, France, Austria, all over. And what we're hearing is that customers are in mission-critical industries. They're essential services, so they're continuing to operate at the pace they always have.
Up from 52% last quarter, and 49% a year ago got it perfect. Thank you guys.
Speaker Change: So it looks like Matt put his hand down. So next question goes to Derrick Wood with TD Cowen followed by Jacobs Saffell with Goldman Sachs.
Sanjit Biswas: As Dominic mentioned earlier, we're selling the operations budget, which tends to be quite a bit larger and very distinct and different from the IT budget. And our customers are seeing clear and fast ROI, as we outlined in the IDC study with the 8X average payback. So I think it's a very clear value proposition to the customer, and we're continuing to sell through whatever's going on in the macro.
Cole: Great. Thanks. This is cole on for Derek.
Speaker Change:
Cole: First I was just looking for an update on the macro and seeing if you know you guys are seeing any sort of sales cycle changes now versus last quarter or last year.
Sanjit Biswas: Sure I'll take that this is Sanjay no major changes from what we saw 18 months ago. That's one sales cycle started to long gate, but they haven't gotten materially shorter longer I have spent a lot of time out on the road with customers not just here in the U S, but in Canada and the.
Dominic Phillips: Super helpful, and then maybe one for Dom. You know, the sales team has grown at a real impressive rate over the last year or so. Just kind of how are you guys thinking about sales hiring as you head into, you know, the rest of your 25? And then maybe an update on sales rep productivity as well would be, you know, super helpful. Thanks.
Sanjit Biswas: U K, Oh, sorry in France, Austria, all over and what we're hearing is that customers are there in mission critical industries their essential services. So they're continuing to operate at the pace they always have.
Dominic Phillips: Yeah, so on the last call, we said that overall headcount in FY24 grew 28% year over year, and that in FY25, we expect it to be around the same. Q1 was a really strong hiring quarter for us, one of our strongest ever, and we're on track for hiring for the rest of the year, so there are no changes to our hiring plans, and we're on track for that.
Sanjit Biswas: As Dominic mentioned earlier, we're starting the operations budget, which tends to be quite a bit larger and very distinct and different from the I T budget and our customers are seeing a clear and fast rois, we outlined an IDC study with eight X average payback. So I think it's a very clear value proposition to the customer and we're continuing to sell through whatever's going on in the macro.
Speaker Change: Super Helpful and then maybe one for Don.
Unknown Executive: Greg Heller. Thanks. All right, the next question comes from Jake.
Unknown Executive: Alright, the next question comes from Jacob with Goldman Sachs, followed by Matt Hedberg with RBC.
Speaker Change: The sales team has grown at a real impressive rate over the last year or so.
Speaker Change: Just kind of how are you guys thinking about sales hiring as you had in the rest of the 25 and then just maybe an update on sales rep productivity as well would be super helpful. Thanks, Yeah. So I mean I on the last call we said that.
Unknown Executive: Hey, guys. Jacob from Goldman is here on for cash. Thanks so much for taking the time to answer the question. I think it's really great to see the continued growth and adoption across video-based safety, telematics, apps, and drivers' workflow, and kind of the disclosures that y'all give on the screen are very Datadog-esque, which is really great to see. So, you know, while acknowledging that MEM and connected forms are still relatively new compared to a core offering, can you touch on just like how adoption has trended relative to initial expectations and, you know, how often are you seeing customers adopt these solutions upon contract renewal, and, you know, anything about the market size relative to the core offering would be great to get more color on? Yeah, I would say, I mean, it is still early days.
Speaker Change: Overall head count in FY 'twenty, four grew 20% year over year and that in FY 'twenty five we expect it to be around the same.
Speaker Change: Q1 was a really strong hiring quarter for us one of our strongest ever and and we're on track for hiring for that for the rest of the year. So no no changes in our in our hiring plans and we're on track for that.
Speaker Change: Great color. Thanks.
Speaker Change: The next question comes from Jackup with Goldman Sachs, followed by Matt Hedberg with RBC.
Dominic Phillips: And so we're, you know, we're still kind of figuring out what the trends are gonna be. I will say that, you know, for connected forms in particular, we were ahead of our internal plan in Q1. So that's great. We called out the 250K connected forms still to the UK customer.
Jacob: Hey, guys Jacob from Goldman here on for Kash. Thanks, So much for taking the question.
Jacob: I think it's really great to see the continued growth and adoption across like video better safety telematics option drivers workflow and kind of the disclosures that you all gave screen very like data dog ask which is really great to see so while acknowledging that N M and connected forms are still relatively new versus the core offering can you touch on just like her.
Dominic Phillips: And so we're seeing some great traction there. That was an expansion to an existing customer. I also called out the city of Pittsburgh, which was a new logo that landed with both MEM and connected forms. So to see the new product adoption for both new logos as well as expansions and kind of getting over our target for the quarter is promising. Great, great. That's great to hear, Dom. I think just one more question from me real quick. I think typically, I'll disclose the net new ACV that stems from new versus existing customers. Was that disclosed this quarter, or did I miss that?
Jacob: How's adoption trended relative to initial expectations and.
Jacob: How often are you seeing customers adopt these solutions upon contract renewal.
Speaker Change: We're up about like the.
Speaker Change: The market size relative to the core offering would be would be great to.
Speaker Change: To get more color on yeah, I would say I mean, it is still early days.
Speaker Change: So we're you know we're still kind of figure out what the trends are going to be I will say that you know for connected forms in particular, we were ahead of our of our internal plan.
Unknown Executive: It was 59% came from expansions, and 41% came from new logos. Okay, great. Thank you.
Speaker Change: In Q1.
Speaker Change: That's great we called out the 250 K.
Unknown Executive: Okay, great. Thank you so much. The next question comes from Matt Hedberg with RBC, followed by Daniel Jester with BMO.
Speaker Change: Connected forms bill to that to the U K customer and so we're seeing some some some great traction there that was an expansion to an existing customer I also called out the city of Pittsburgh, which was a new logo that landed with both MGM and connected forms so to see the new product adoption for both new logos as well as expansions.
Speaker Change: And kind of getting over our target for the quarter as promising great.
Unknown Executive: Matt, are you there? Okay, let's keep going. So Daniel, let's go with Daniel from BMO.
Speaker Change: Great that's great to hear them and then I think just one more question for me real quick I think typically you'll disclose in that new HCV. This stems from new versus existing customers was that disclosed this quarter or did I did I missed up it was a 59% came from expansions 41, 41% came from new logos. Okay. Great. Thank you so much welcome.
Unknown Executive: Hey, great. Thanks for taking my question. Maybe on the international strength that you called out in the quarter, how much of the improvement in international has been just about building capacity and opening up new offices versus actually sort of improving the underlying velocity of the folks that you have had in the seats for a while?
Speaker Change: The next question comes from Matt Hedberg with RBC, followed by Daniel gesture with BMO.
Unknown Executive: Yeah, I think it's really a combination of both when you enter, whenever you enter into like a new product category or new geography, new customer segment, it takes time to, you know, build out the sales capacity, get it rammed, get it productive, find, you know, lighthouse customers. And we've obviously been investing in international, and we're seeing the kind of progress there steadily over the last several years. And so we're really pleased with the 18% net new ACV mix and, in particular, the strength in both Europe and Mexico.
Speaker Change: Matt are you there.
Speaker Change: Okay, let's let's keep going so Danielle, let's go with Daniel from BMO.
Daniel William Jester: Hey, great. Thanks for taking my question, maybe on the international strength and that you called out in the quarter how much of the improvement in international have been just about building capacity and opening.
Dominic Phillips: Okay, great. Thank you. And then, you know, Dom, maybe on the update on the full-year guidance and some of the comments you made about the macro, maybe you could just expand about sort of what you've sort of baked in terms of assumptions or, you know, thoughts about how the rest of the year could progress would be very helpful. Thank you.
Daniel William Jester: Up new offices versus actually sort of improving the underlying velocity of the folks that you have had in the seats for a while.
Speaker Change: Yeah, I think it's really a combination of both when you enter whenever you enter into like a new product category or a new geography, new customer segment.
Dominic Phillips: Yeah, so I mean, again, we framed the guidance as, you know, relatively de-risked. We've run a number of different scenarios on our internal operating plan and provided guidance that we feel highly confident that we're going to be able to hit, regardless if we see changes in the macroeconomic, you know, environment, or changes in customer demand, which we're not seeing today. But if we do start to see some changes, we feel confident that we'll still be able to hit that guidance.
Speaker Change: It takes time to turn to.
Speaker Change: Build out the sales capacity to get at Ramsgate, a productive find lighthouse customers and we've obviously been investing in international and we're seeing the kind of the progress there steadily over the last several years and so we're really pleased with the the 18% net new ECB mix and in particular again the strength in both Europe and Mexico.
Speaker Change: Okay, great. Thank you and then.
Speaker Change: Maybe an update.
Unknown Executive: Great, thank you very much. The next question comes from Alexei with JPMorgan, followed by Junaid with Truist.
Speaker Change: Update on the full year guidance and some of the comments you made about the macro maybe you can just expand about sort of what you sort of baked in in terms of assumptions or.
Unknown Executive: The next question comes from Alexi with JPMorgan, followed by Junaid with Truist. [inaudible] Okay, let's move forward. Let's go with... Junaid with Truist, followed by James Fish with Piper. Great. Thank you for taking my question.
Speaker Change: Talks about how the rest of the year could you address would be very helpful. Thank you yeah. So I mean again, we framed the the guidance as you know is relatively derisked, we've run a number of different scenarios on our internal operating plan and and and provided guidance that we feel highly confident that we're going to be able to hit regardless, if we see changes in the <unk>.
Speaker Change: <unk> economic environment, if we see changes in customer demand, which we're not seeing today.
Speaker Change: But if we did start to see some changes that we feel confident that we'll still be able to hit that guidance.
Speaker Change: Great. Thank you very much.
Speaker Change: The next question comes from Alexia <unk> with J P. Morgan followed by <unk> with tourists.
Unknown Executive: Yeah, it's an important question, and I think we feel really good about the balance. That's been a real strength in our model, the balance kind of between expansions and net new ACV. And this quarter, you know, was no different where we had strength in both.
Speaker Change: Biloxi.
Speaker Change: Okay, let's move forward.
Speaker Change: Let's go with.
Speaker Change: Yeah.
Speaker Change: Delayed with Jewish followed by James Fish with Piper.
Speaker Change: Great. Thanks for taking my question.
Unknown Executive: While 59% of the net new ACV mix came from expansions, and to your point, a lot of that comes from larger customers that do more of a phased rollout, it was also a really strong new logo quarter. It was the second highest number of new core logos that we've ever added. Additionally, 10 of the top 10 new logos were multi-product transactions. Six of the top 10 new logos included three or more products. And so you know, we're really pleased with the balance of the business and expect that to be the case going forward.
Speaker Change: As you shift your focus on serving larger enterprises.
Speaker Change: And net new HIV becomes a bit more skewed towards expansion.
Speaker Change: I was just curious how do you look at our new logos versus expansion framework going forward.
Yeah. It's a it's an important question and I think we feel really good with the balance that's been a real strength in our model the balance between expansions and net new ACB and and and and this quarter was no different where we had strength in both.
Unknown Executive: The next question today comes from James Fish with Piper Sandler, followed by Michael Turrin with Wells Fargo.
Unknown Executive: Hey guys, thanks for the questions. No worries; I'm actually on.
While 59% of the net new HCV mix came from expansions and to your point a lot of that comes from larger customers that do more of a phased rollout. It was also really strong new logo quarter.
Speaker Change: It was the the second second highest number of new core logos that we've ever added a 10 of the top 10, new logos were multi product transactions six of the top 10, new logos included three or more products and so we're really pleased with the balance of the business and expect that to be the case going forward.
Sanjit Biswas: Look, we're seeing some competitors wind down their telematics business and shift into other areas. I guess, how much is that benefiting the current environment for you, and how are win rates trending? Just generally, any update on the competitive environment and, as well as, you know, against the vendors you actually have a lawsuit against, too, if those win rates are improving given that you guys have that on the table and try and prevent them from copying you.
Speaker Change: Thank you.
Speaker Change: The next question today comes from James Fish with Piper Sandler followed by Michael Cherny with Wells Fargo.
Speaker Change: Hey, guys. Thanks for the questions no worries I'm actually on.
Sanjit Biswas: Hi James, this is Sanjit. I would say, in general, the competitive environment's been quite stable. There are a number of legacy point solutions that our customers have adopted over the last 20-25 years, and many of them are now looking to standardize on a single platform approach, which is what we offer. We're that system of record for them. So I think we do offer a very modern solution, and that's been our value proposition really since the beginning.
Speaker Change: Okay.
Speaker Change: Look we're seeing some competitors wind down their telematic space medicine shifted into other areas I guess, how much of that benefiting the current environment for you in our win rates have been trending just generally any update on the competitive environment.
Speaker Change: Well as you know against the vendors you actually have a lawsuit against you. If those win rates are improving given you guys have that on the table one I'm trying to prevent them from copying you.
Sanjit Biswas: That's still responding. And then the competitive dynamic with the variety of competitors, again, is stable, and you see that reflected in our gross margin. It's been very stable. So overall, it's a big market out there, and we're just continuing to grow.
Dominic Phillips: All right, and then, Dom, just to go into that whole de-risking for potential worsening of macro factors on the ARR side, I guess, what are you seeing that is micro specific to you guys as it ties into the macro that you're leaving that view unchanged? Is it, you know, just trying to err on the side of caution like some others have, or is the macro environment starting to show signs of impacting operational budgets? No, I think it's just us wanting to.
Sanjit Biswas: Hi, James This is Sanjay I would say in general the competitive environment has been quite stable. There are a number of legacy point solution that our customers have adopted over last 2025 years in <unk>.
Sanjay: Many of them are now looking to standardize on a single platform approach, which is what we offer where the system of record for them. So I think we do offer a very modern solution and that's been our value proposition really since the beginning that's still resonating and then the competitive dynamic with the variety of competitors again is stable and you see that reflected in our gross margin it's been.
Dominic Phillips: No, I think it's just us wanting to make sure that we're setting expectations that we feel highly confident about, you know, that we're going to be able to hit where we're not seeing any change in customer demand or, you know, any sort of macro impact. And again, I think it goes back to the fact that we're offering real clear ROI, as the IDC report called out eight x ROI on average.
Sanjay: Very stable.
Sanjay: So overall, it's a big market out there and we're just continuing to grow.
Speaker Change: Alright, and then Don just go into that whole derisking for potential worsening of macro factors on the IRR side.
Dominic Phillips: And then again, we're just selling into a very different budget, the operations budget. It's very people and asset intensive. And these are very, very large budgets that have been very underserved by technology. And, you know, we're having a lot of success grabbing more market share.
What are you seeing that as.
Speaker Change: Micro specific to you guys as it ties into the macro that you're leaving that view unchanged visit.
Speaker Change: Just trying to air on the side of caution like some others have or as a macro starting to show signs of impacting operational projects. No. I think it's just us wanting to make sure that we're setting expectations that we feel highly confident that we're going to be able to hit where we're not seeing any change in customer demand or or you know any sort of macro impact and again I think it goes.
Unknown Executive: The next question comes from Michael Turrin with Wells Fargo, followed by Dylan Becker with Will and Blair.
Unknown Executive: Hey, great. Thanks. I appreciate you taking the questions. Sanjit, the letter leads by mentioning you've been out visiting some of your larger customers. We see those videos from time to time.
Speaker Change: Back to the fact that.
Speaker Change: We're offering real clear ROI as the IDC report called out eight X you know ROI on average and then again, we're just selling into a very different budget the operations budgeted Terry people and asset intensive.
And these are very very large budgets that have been very underserved by technology N M. And you know, we're having a lot of success grabbing more market share.
Sanjit Biswas: Are there, is there, I'm just wondering if there's any change in terms of priorities you're picking up in 2024 and what they're asking you to help solve versus maybe what that looked like a couple of years ago, just to help us get a sense of what the next few years could bring for Samsara in terms of evolution of the product.
Speaker Change: Thank you Scott.
Speaker Change: The next question comes from Michael Cherny with Wells Fargo fall by Dylan Becker with William Blair.
Speaker Change: Hey, great. Thanks, I appreciate you taking the questions Sanjay the lateral leaves mentioning you've been out visiting some of your larger customers, we see that as <unk>.
He is from time to time are there is there I'm just wondering if theres any change in terms of priority as youre picking up in 2024, and what they're asking you to help solve versus maybe what that looks like a couple of years ago, just to help us get a sense of what the next few years could bear for Sam Sarah.
Michael James Turrin: In terms of evolution of the product, Yeah, Hey, Michael Yeah, I've been on the road a lot and it's a really exciting to be able to visit customers in their operational settings. I think the biggest trend that I've seen is this real shift towards a digital strategy almost every customer from the top down whether it's a board level or the C level. They are trying to figure out how to just <unk>.
Michael James Turrin: More digital technologies into their business because they see that data is helping them make smarter operational decisions. So five years ago, we would typically.
Sanjit Biswas: Yeah. Hey, Michael.
Michael James Turrin: The invited into pitch one of our specific applications, whether its telematics or video based safety now customers are looking to adopt the platform and that includes those two applications, but also connected equipment and forms an M. D M and everything else we were talking about earlier, that's distinctly different and they are integrating this platform with others. So the idea that we have over 207.
Sanjit Biswas: Yeah, I've been on the road a lot, and it's really exciting to be able to visit customers in their operational settings. I think the biggest trend that I've seen is this real shift towards a digital strategy. Almost every customer, from the top down, whether it's the board level or the C level, is trying to figure out how to just adopt more digital technologies in their business because they see that data is helping them make smarter operational decisions.
Michael James Turrin: <unk> five app marketplace integrations is really exciting because they can get more value from the data. So I would say the big takeaway is very strong interest in digitizing and then more sophistication when it comes to looking to integrate these systems to get more value from the data.
Speaker Change: Super helpful. Dominic did 77% gross margin.
Speaker Change: Pretty notable.
Speaker Change: Where you've started I appreciate the commentary in the letter around expecting near term that to stay closer to where we were last year, but maybe you can speak to the Q1 drivers and just longer term.
Speaker Change: There is still headroom, you see azure, adding scale into that line.
Speaker Change: Yeah, you know obviously, you know pricing power definitely helps gross margins and then we're just we're getting really good about you know optimizing costs and so.
Sanjit Biswas: So, you know, five years ago, we would typically be invited in to pitch one of our specific applications, whether it's telematics or video-based safety. Now, customers are looking to adopt the platform, and that includes those two applications, but also connected equipment and forms and MEM and everything else we were talking about earlier. That's distinctly different, and they're integrating this platform with others. So the idea that we have over 275 app marketplace integrations is really exciting because they can get more value from the data. So I would say the big takeaway is a very strong interest in digitizing and then more sophistication when it comes to looking to integrate these systems to get more value from them.
Speaker Change: Customer support warranties cellular data hardware costs, a lot of these things are coming down in <unk>.
Speaker Change: That's definitely helped us bring up our gross margins over time there are some.
Speaker Change: The timing differences in terms of which quarters, some some payments and costs ultimately hit.
Speaker Change: And so we feel good about so getting to kind of the same gross margin that we got to last year.
In medium and longer term there could be more upside to that but for the near term. We think are more of the the the leverages in the model is going to come from from the Opex line items.
Speaker Change: Thanks very much.
Speaker Change: The next question comes from Dillenbeck with William Blair fall by Kirk return with Evercore.
Hey, gentlemen, I appreciate the question, maybe Sanjay starting for you I think the hard ROI here is very evident but you just touched on to maybe the value proposition of the ease of integration and connectivity across the ecosystem unlocking some of that siloed data across across an enterprise, but maybe how how does that compound the value of it.
Speaker Change: A very tangible ROI, but the ability to kind of leverage that and access that has accelerated as well.
Sanjay: Well you know I think the main thing that we see with customers is that we really become that center of gravity for the data. So they push all the data and systems are as the system of record they connect us to those other systems I do think there'll be compounding value effects. There of some of those come from integration. Some of it also comes from our ability to go processes nine trillion data points, we're seeing.
Dominic Phillips: Super helpful. Dominic, the 77% gross margin is pretty notable from where you've started. I appreciate the commentary in the letter around expecting near term that to stay closer to where we were last year, but maybe you can speak to the Q1 drivers about just the longer term if there's still headroom you see as you're adding scale onto that line. Thanks.
Sanjay: Every year train AI models on it to go find new insights and then turn those into actions through those workflows, so theres value kind of coming in both of those areas. One is connecting us to other systems and that could be insurance payroll ERP. There's a really wide range and then the other is just us being able to deliver more value in our applications.
Speaker Change: Sure and maybe it's a good segue as you think about those larger customers that are adopting more and maybe how that contributes to kind of the compounding effects of the ecosystem and unlocking more of that intelligence or capabilities to kind of go digitize more than what youre doing today, so thinking about the opportunity for Tam expansion on our platform expansion there.
Speaker Change #100: Yes, absolutely during the way we think about it is we run what we call our customer feedback loop. So these these customers are these large complex physical operations. They tend to have many many real world problems, they're trying to solve we're able to take down many of them with those initial applications, but Ah connected equipment is great example of a business line that they're really grew over time, because our customers had met.
Dominic Phillips: Yeah, obviously, you know, pricing power definitely helps gross margins. And then we're just getting really good at, you know, optimizing costs. And so customer support warranties, cellular data, hardware costs, a lot of these things are coming down. And that's definitely helped us bring up our gross margins over time. There are some timing differences in terms of which quarters some payments and costs ultimately hit. And so you know, we feel good about still getting to kind of the same gross margin that we got to last year.
Speaker Change #100: Any non vehicle assets add trailers generators compressors, all kinds of things out in the field and they wanted the same kind of visibility and insight into those so we're excited to keep running this sort of feedback loop and we're going to do it.
Speaker Change #100: For.
Speaker Change #100: All of the different products that we have and hopefully introducing more products just in that same philosophy.
Dominic Phillips: And in the medium and longer term, there could be more upside to that. But, you know, for the near term, we think more of the leverage in the model is going to come from the OPEX line items.
Speaker Change #101: Great. Thanks, Ed.
Speaker Change #102: Our last question today comes from Kirk <unk> with Evercore.
Kirk: Thanks, very much and congrats on the quarter as Sanjay I was wondering if you could just talk a little bit of that going back to connected forms how are discussions like that with the customer maybe expands.
Speaker Change #104: The decision makers are on the side of the customer meeting I'd be curious if that deal in particular or others. Frankly means that you start going in you know outside the business buyer and starting to get into the CIO in and Dom sort of Relatedly I was I was curious what that does in terms of pricing on a per device basis versus opening it up to more of a.
Speaker Change #104: Per user basis.
Speaker Change #104: As you go broader within your customers. Thanks.
So I'll start by talking about the use cases and the buyer almost all of this continues to center around the operations buyer because they're the ones that are dealing with the compliance paperwork in the checklists and kind of the operational complexities many of them partner closely with their counterparts within the organization, but the beautiful thing about connected forms is.
Sanjit Biswas: Our last question today comes from Kirk Materne with Evercore.
Unknown Executive: The next question comes from Dylan Beck with William Blair, followed by Kirk Materne with Evercore.
Sanjit Biswas: Hey gentlemen, I appreciate the question. Maybe Sanjit, starting for you, I think the hard ROI here is very evident, but you just touched on, too, maybe the value proposition of the ease of integration and connectivity across the ecosystem, unlocking kind of some of that siloed data across an enterprise, but maybe how does that compound the value of, it's a very tangible ROI, but the ability to kind of leverage that and access that is accelerated as well.
Sanjit Biswas: Well, you know, I think the main thing that we see with customers is that we've really become that center of gravity for the data. So they push all the data into Samsara as a system of record, and they connect us to those other systems.
Sanjit Biswas: I do think there will be compounding value effects there. Some of those come from integration; some of it also comes from our ability to process those 9 trillion data points we're seeing every year, train AI models on them to go find new insights, and then turn those into actions in this workflow. So there's value kind of coming in both of those areas. One is connecting us to other systems, and that could be insurance, payroll, and ERP; there's a really wide range. And then the other is just us being able to deliver more value in our applications.
Sanjit Biswas: Sure, and maybe it's a good segue as you think about those larger customers that are adopting more, maybe how that contributes to kind of the compounding effects of the ecosystem and unlocking kind of more of that intelligence or capabilities to kind of go digitize more than what you're doing today. So thinking about the opportunity for TAM expansion or platform expansion. Yeah, absolutely.
Sanjit Biswas: Yeah, absolutely. Dylan, the way we think about it is we run what we call a customer feedback loop. So these customers have these large, complex physical operations; they tend to have many, many real world problems they're trying to solve, and we're able to take down many of them with those initial applications. But connected equipment is a great example of a business line that really grew over time because our customers had many non-vehicle assets.
Sanjit Biswas: They had trailers, generators, compressors, all kinds of things out in the field, and they wanted the same kind of visibility and insight into those. So we're excited to keep running this sort of feedback loop. And we're going to do it for all the different products that we have and, hopefully, introduce some more products just in that same philosophy.
Speaker Change #104: You don't need to be a programmer to be able to reconfigure the former change the workflow or change the alerting and triggers where you can the operations user can do all of that so I think we're continuing to sell into operations, but you're right that we're able to expand the use cases, very broadly well beyond vehicles and other assets all different kinds of business process and I think the C. I OS are excited.
Speaker Change #104: To see it because it's reducing the load on their teams to let operations be able to configure their own software.
Sanjit Biswas: Yeah, thanks very much. And congrats on the quarter. Sanjit, I was wondering if you could just talk a little bit about going back to connected forms, you know, how a discussion like that with the customer maybe expands the decision makers on the side of the customer, meaning I'd be curious if that deal in particular or others, frankly, you know, means that you start going in, you know, outside the business buyer and start to get into the CIO and, and Dom sort of relatedly, I was curious what that does in terms of, you know, pricing on a per device basis versus opening it up to more of a per user basis as you go, you know, broader within your customer set. Thanks.
Speaker Change #105: Yeah, Kurt on the <unk>.
Sanjit Biswas: So I'll start by talking about the use cases and the buyer. Almost all of this continues to center around the operations buyer because they're the ones that are dealing with the compliance paperwork and the checklists and kind of the operational complexities. Many of them partner closely with their IT counterparts within the organization, but the beautiful thing about Connected Forms is you don't need to be a programmer to be able to reconfigure the form or change the workflow or change the alerting and triggers.
Sanjit Biswas: The operations user can do all that, so I think we're continuing to sell into operations, but you're right that we're able to expand the use cases very broadly, well beyond vehicles and other assets, so all different kinds of business processes. And I think the CIOs are excited to see it because it's reducing the load on their teams to let operations be able to configure their own software.
Speaker Change #106: The pricing across all of our different products you know, they're all subscription based licenses, we sell to three three to five years.
Dominic Phillips: Yeah, Kirk, on the pricing, across all of our different products, you know, they're all subscription-based licenses we sell, you know, three to five years. For different products, the pricing meter can be different, and so it could be a physical asset. For mobile experience management, it's the number of, you know, mobile devices, and to your point, for the Connected Forms product, we're tying it to the number of users, and so all of them still result in subscription revenue, but the meter can be different. And as we get into some of these software-only products like MEM and Connected Forms, they're obviously gross margin accretive because we're just providing software on top of the data that we've already collected.
Dominic Phillips: So that was a great conversation, and this concludes the question and answer portion. Thank you all for attending our Q1 fiscal year 2025 earnings call. Before I let you go, I have a few short announcements. First, we'll be attending the BMO Virtual Software Conference on June 10th and the FBN Silicon Valley Virtual Tour on June 13th. We hope to see you at one of these events. Second, we are hosting our Investor Day on June 27th in Chicago, where we will provide additional insights into Samsara's trajectory and overall state of physical operation.
For different products that the the pricing meter can be different and so it could be a physical asset for the mobile experience management. It's the number of mobile devices and to your point for their connected forms product, we're tying it to the number of of of users and so all of them still result in subscription revenue, but the the the meter can be different and as we get into some of these.
Speaker Change #106: Software only products like M M and connected forms are obviously gross margin accretive.
Speaker Change #106: Because we're just.
Dominic Phillips: Please send an email to IR at samsara.com if you're interested in attending in person. For those who prefer to attend virtually, our Investor Relations website will have a link to a live broadcast. That's it for today's meeting. If you have any follow-up questions, you can email us at ir at samsara.com. Thanks again. Bye everyone.
Speaker Change #106: Providing software on top of the data that we've already collected.
Speaker Change #107: Thank you all.
Speaker Change #108: So that was very conversation and this concludes our question and answer portion. Thank you all for attending our Q1 fiscal year 2025 earnings call before I, let you go out a few short announcements.
Speaker Change #108: First we'll be attending the BMO virtual software conference on June 10th and the F. B N Silicon Valley Virtual tour in June 13th we hope to see you. One of these events second we are hosting our Investor day on June 27th in Chicago, where we will provide additional insights into sensors trajectory and the overall state of physical operations.
Speaker Change #108: Please send an email to IR at <unk> Dot com, if you're interested in attending in person for those who prefer to attend virtually or Investor relations lets say, we will have a link to a live broadcast.
Speaker Change #108: 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.