Q3 2025 Samsara Inc Earnings Call
mission is to bring our loved ones home safe.
and also to do so in a sustainable way.
We provide Uber drivers with electric vehicles, car drivers, insurance companies. We have a fleet of 5,000 vehicles, of which about 4,000 are electric. And we move Wembley Stadium, which is about 80,000 people a day.
Our partnership with Samsara has helped us grow using technology to bring more safety and with that we've been able to reduce our insurance costs, we have better data insights into our vehicles around reporting sustainability matters which we now do as part of our tax and audit reporting, but the biggest one of all is big driver behaviour. Safety is the mantra.
We use Samsara as a preventative tool, an educational tool for drivers to improve their driving around London.
We're tracking hours and miles.
If someone looks tired, fatigued, if we see dangerous driving, we can act on it, jump on it, and hopefully rectify a driver's behavior.
and that way you're preventing accidents from even happening. We have tracked a reduction in mobile phone usage over the years. After that, we see an improvement in their driving stats and scores.
We have seen our insurance premiums drop 10-15% by us being able to manage the performance of the drivers through Samsara. And that's what Samsara enables us to do. We can get ahead of the game. Samsara has helped us to ultimately make things better for the customer and their journey. They feel that they've got a support network behind them.
It really does help with the ethos that Otto actually wants. Everybody goes home safely to their family and loved ones.
Speaker Change: Good afternoon and welcome to SAMHSA's third quarter fiscal 2025 earnings call. I'm Mike Chang, SAMHSA's Vice President of Corporate Development and Investor Relations.
Joining me today are SAMHSA Chief Executive Officer and Co-Founder Sanjit Biswas and our Chief Financial Officer Dominic Phillips.
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 on our investor relations website at investors.simstar.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, December 5th, 2024, and we undertake no obligation to update these statements as a result of new information or future events unless required by law.
Speaker Change: During today's call, we will not discuss our third 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.
Speaker Change: Reconciliations of GAAP to non-GAAP financial measures are provided in our press release and investor presentation.
Speaker Change: We'll make opening remarks, dive into highlights for the quarter, and open the call up for Q&A. With that, I'll hand over the call to Sanjit.
Thanks, Mike, and thank you, everyone, for joining us today.
Sanjit Biswas: Samsara delivered another strong quarter of durable and efficient growth. We ended Q3 with $1.35 billion in ARR, growing 35% year-over-year. We also delivered a quarterly record 10% adjusted free cash flow margin.
Sanjit Biswas: Our growth is powered by our deep partnerships with the world's largest and most complex operations organizations.
Sanjit Biswas: In Q3, we added 170 customers with more than $100,000 in ARR, our second highest quarterly additions ever.
Sanjit Biswas: This includes major customer wins with large organizations like Papa John's, the world's third largest pizza delivery company, a Fortune 500 confectionery, food, and beverage company, and a Fortune 1000 network of full-service medical equipment companies.
Sanjit Biswas: As we continue to grow, we're excited about the innovation that we're unlocking with more scale. This includes better AI models and benchmarking, stronger customer feedback loops to better understand our customers' challenges, and more R&D dollars to invest in technology.
Sanjit Biswas: Our customers provide the mission-critical infrastructure that keeps the world running. They have asset-heavy and labor-intensive operations.
Sanjit Biswas: We're partnering with them to digitally transform their organizations. Our growing data asset feeds our AI-powered platform, which delivers insights to our customers so they can improve their operations. This translates to clear and fast ROI with payback periods often measured in months.
Sanjit Biswas: In a recent survey with IDC, they estimated that Samsara customers realized $2 million of savings, on average, per customer per year. This equates to more than 8 times ROI.
Sanjit Biswas: Typical savings include lower insurance premiums and payouts, improved fuel efficiency, lower maintenance costs, better asset utilization, improved worker hiring, and retention.
Sanjit Biswas: As our customers achieve ROI, they often expand with us for even more savings.
Sanjit Biswas: I'd like to share two examples of customers that have realized clear and fast ROI. They both expanded this quarter and have had multiple expansions since becoming customers.
Sanjit Biswas: Comfort Systems is a Fortune 1000 company that provides heating, ventilation, air conditioning, and electrical contracting services.
Sanjit Biswas: Their operations span over 170 locations with over 40 operating units and over 18,000 employees.
Sanjit Biswas: Comfort systems prioritizes safety as a core value and is committed to a zero harm work environment.
Sanjit Biswas: With Samsara, they achieved an 85% reduction in vehicle safety events and a 72% reduction in speeding in just six months. They are now a top 25 customer and have had nine expansions since becoming a customer in 2022.
Sanjit Biswas: In Q3, they added asset tags and expanded with more of Samsara's video-based safety, telematics, and equipment monitor.
Sanjit Biswas: They're using asset tags to track high-value, smaller equipment on job sites, like scissor lifts, welders, and pipe machines. They're also using asset tags to improve their asset utilization.
Sanjit Biswas: Next, let's turn to a Fortune 500 global company that provides water, hygiene, and infection prevention solutions and services.
Sanjit Biswas: They have 48,000 employees and 11,000 light-duty vehicles to support nearly 3 million customer locations worldwide. They became a customer in 2021 and have had 11 expansions with us.
Sanjit Biswas: They're using our video-based safety and telematics applications across two of their divisions. We've also identified additional expansion opportunities in five more divisions.
Sanjit Biswas: They have decreased harsh driving events by 37% using SEMSAR's video-based safety application.
Sanjit Biswas: In a pilot this year, they also reduced severe speeding by 48% and decreased forward collision warning events by 50% within cab alerts. We are proud to partner with our customers to make a real-world impact on their operations.
Sanjit Biswas: AI is amplifying our impact on the safety, efficiency, and sustainability of our customers' operations. We recently surveyed over 1,500 leaders in physical operations in our State of Connected Operations report.
Sanjit Biswas: We found that AI-driven advancements are fundamentally reshaping how these organizations operate. 87% reported that they are planning to increase AI investments in the coming year. They reported many benefits of AI.
Sanjit Biswas: 45% cited improvements in safety, 45% highlighted enhanced data and analytics capabilities, and 43% reported gains in operational efficiency.
Sanjit Biswas: These findings show the powerful role AI will play in the future of connected operations.
Speaker Change: To bring more AI to our customers, we announced Samsara Intelligence earlier this week. It is an expanded suite of AI offerings that helps teams make smarter decisions and run safer, more efficient operations.
Speaker Change: Samsara Intelligence is trained on our expansive data set, which has great scale and breadth.
Speaker Change: We now process more than 10 trillion data points and 70 billion miles driven annually. Our data spans a broad and diverse group of asset types, end markets, data types, and geographies. Our customers face tough challenges and our AI models use this data to help them solve real-world use cases.
SAMHSAR Intelligence includes SAMHSAR Assistant and Intelligent Experiences.
Speaker Change: Samsara Assistant is an interactive, generative AI tool that provides instant answers to their operational questions. It improves the safety, maintenance, and compliance of our customers' operations.
Speaker Change: Some examples include identifying vehicles with severe fault codes and receiving step-by-step instructions to resolve them.
Speaker Change: spotting time-sensitive disruptions in daily operations like unexpected stops which might signal a driver is at risk or in need of assistance.
Speaker Change: determining the safest drivers and recognizing them for their performance, and understanding hours of service regulatory requirements for a new geography or customer type.
Speaker Change: Intelligent Experiences embeds AI recommendations and actions throughout the Samsara platform.
Speaker Change: It makes AI accessible to the frontline by providing visual, training, and coaching intelligence.
Speaker Change: For example, frontline workers can identify safety hazards from a photo on a job site. They can also provide proof of delivery records from a photo of a bill of lading.
Speaker Change: Operators can also improve their safety and compliance while reducing administrative time by creating a custom worker training module just by uploading a policy document.
Speaker Change: Both Samsara Assistant and Intelligent Experiences are now available in beta to customers in North America. They will be generally available after running our customer feedback loop.
Speaker Change: We're excited to see many of our initial customers already achieving significant impact from our new AI products.
Now, I'd like to turn to international growth.
Speaker Change: I've met with dozens of customers in our international markets this year.
Speaker Change: Every time I meet with them, I'm inspired by the long-term opportunity to expand our impact.
Speaker Change: First, the international market is very large. There are more assets and frontline workers in Europe, Canada and Mexico than in the U.S.
Speaker Change: Second, the international market is less penetrated than the U.S. and earlier in its digitization journey.
Speaker Change: Third, despite the low penetration, the opportunity for impact and customer ROI is comparable in these regions. These customers are achieving similar savings from insurance payouts and premiums, fuel costs, improved worker retention, and asset utilization.
Speaker Change: In November, we hosted two international customer events, Go Beyond, our first European customer conference, and Innovation Day in Mexico.
Speaker Change: We brought together hundreds of local customers at each event to discuss how AI and data are impacting the world of connected operations. We also announced several new product features tailored for customers in these local markets.
Speaker Change: At Go Beyond in Europe, we announced two new features, low-bridge strikes and electronic brake performance monitoring system, which we call eBPMS.
Speaker Change: Low bridge strikes uses AI to help our European customers minimize the risk of their trucks hitting low bridges. Customers set the maximum vehicle height and drivers are alerted whenever they approach a bridge that's too low to pass.
Speaker Change: Every year, nearly 2,000 bridge strikes happen in the UK, costing UK taxpayers around £23 million.
Speaker Change: eBPMS helps our customers maintain their braking performance record. It also alerts fleet operators when braking performance falls below acceptable standards or if it detects faults.
Speaker Change: We expect that in 2025 EVPMS will become one of the two accepted methods for brake testing in the UK.
Speaker Change: At Innovation Day in Mexico, we announced the Engine Immobilizer 2.0 feature.
Physical security is top priority for our customers in Mexico.
Speaker Change: This feature allows new customizable alerts to meet operators needs when their safety is compromised.
Speaker Change: It also provides detailed real-time reports through the SAMHSARA dashboard. This helps customers effectively monitor the safety of their vehicles.
Speaker Change: Our local customers were excited by these new capabilities and we're looking forward to seeing the impact.
Speaker Change: It's been another exciting quarter of durable and efficient growth for Samsara. We're all grateful for the partnership of our customers around the globe.
Speaker Change: We'd like to thank all of our Samsarians, customers, partners, and investors for being part of this journey. Together, we're just getting started. I'll now hand it over to Dominic to go over the financial highlights for the quarter.
Dominic Phillips: Thank you, Sanjit. Q3 was another quarter of sustained high growth at scale and continued operating leverage.
Dominic Phillips: In particular, the quarter was highlighted by surpassing 100 $1,000,000 plus ARR customers.
Dominic Phillips: adding 170, 100K plus ARR customers, our second highest quarterly additions ever, more than 100% quarter over quarter growth in asset tag net new ACV, and just our second quarter of selling the product, and achieving quarterly records for gross margin, operating margin, and free cash flow margin.
Speaker Change: Second this quarter included a balanced mix of landing new customers and expanding existing customer relationships for new logos. We added over 1000 core customers for the fifth consecutive quarter, including our second highest number of core customers added. Additionally, a quarterly record 78 of the 170 100 K plus.
Arrow customers added where new customers.
Speaker Change: Also nine of the top 10, new customers signed with multiple products one of the largest new customers a global leader in third party logistics with over 110000 employees signed up more than $1 million transaction across four different applications.
In addition to licensing our two vehicle based applications video based safety in vehicle telematics. This customer also subscribed to equipment monitoring and one of our newer software only skus in their initial transaction.
Speaker Change: For expansions 16 of our top 25 customers expanded in Q3, and 21 of our top 25 customers have expanded over the past two quarters.
So eight of the top 10-Q, three expansions included multiple products.
Speaker Change: The strength and expansion has also allowed us to achieve our target dollar based net retention rate of 115, and 120% for core and large customers respectively.
Speaker Change: And third we demonstrated strong execution across several frontier markets, 17% of net new HCV came from international geographies in Q3, the second highest quarterly contribution ever.
Speaker Change: The strength in international was driven by Mexico, which contributed its highest ever quarterly net new HCV mix, including nine transactions greater than 100, K in Europe, which accelerated year over year AOR growth for the fourth consecutive quarter.
Speaker Change: Construction drove the highest net new ACB a mix of all industries for the fifth consecutive quarter.
Speaker Change: And public sector contributed its highest net new ACB mix over the last four years, including a quarterly record 16 transactions greater than 100, K led by customers such as the city of Omaha, Fresno County, and the Florida Department of fish and wildlife.
Speaker Change: And we also saw strength in emerging products in Q3, we surpassed 70% of large multi product customers using a non vehicle application and we achieved more than 100% quarter over quarter growth in asset tag net new HCV in just our second quarter of selling that product.
Speaker Change: In addition to driving strong top line growth, we continued to deliver operating leverage across our business as we scale.
We delivered quarterly records across all key non-GAAP profitability metrics, including a 78% gross margin, 11% operating margin in the 10% free cash flow margin.
Speaker Change: Now turning to guidance, we're raising our full year guidance across all key metrics because of our strong Q3 performance.
Speaker Change: As a reminder, last year's fiscal Q4 included a 14th week compared to a standard 13 week quarter in this year's fiscal Q4.
Speaker Change: We expect the impact of having one fewer week in Q4. This year, we will remove three percentage points of year over year revenue growth in FY, 'twenty, five which was already factored into previous and current adjusted revenue guidance.
Sanjit Biswas: For full year FY 'twenty five we expect revenue to be between one point to three seven and one point to three 9 billion representing year over year adjusted revenue growth of 35%. Our implied Q4 revenue guidance from last quarter of $3 $34 million to $336 million remains unchanged.
Sanjit Biswas: We expect FY 'twenty five non-GAAP operating margin to be approximately 7% and non-GAAP EPS to be between 22 and 23 cents.
Sanjit Biswas: And finally, please see additional modeling notes in our shareholder letter.
Sanjit Biswas: So to wrap up we are pleased with our Q3 performance and improved outlook for FY 'twenty five in Q3, we sustained high growth at scale, while also delivering record operating leverage and.
Sanjit Biswas: And looking forward, we believe we're well positioned to continue delivering durable and efficient growth for the following reasons.
Sanjit Biswas: 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 and a fast payback period to our customers and we're targeting a very different operations budget.
Sanjit Biswas: We're proud to partner with our customers and are excited to continue helping them operate more safely efficiently and sustainably and with that I'll hand, it over to Mike to moderate Q&A. Thanks.
Speaker Change: 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.
Sanjit Biswas: The first question today comes from Matt Hedberg with RBC, followed by Keith Weiss with Morgan Stanley.
Speaker Change: Great. Thanks for taking my question. Thanks, Mike Congrats on the quarter guys essentially I wanted to start with you. If there was a lot of talk about AI usage within your customer base I'm kind of curious I know, it's been something you guys have been focused on for a long time and trying to come up with sort of the Nextgen killer.
Speaker Change: I Wonder if you could give us a little bit more insight into the product development roadmap there.
Speaker Change: Sure. So you know some of the recent announcements I think highlight our continued investment in AI like you said, Matt we've been investing in AI for several years now the video based safety application really unlock a tremendous amount of value for our customers. We think there are additional ways to unlock value using all of the data we've been collecting AR.
Speaker Change: <unk> 10 trillion data points 70 million miles 70 billion miles driven on the platform every year. So we see ways to not just unlock value in safety, but in areas like maintenance, where we're able to find insights and default code data.
We see a tremendous number of fault codes every year, we understand the outcomes of those so that's one example, and then there's other areas like fuel efficiency and just asset utilization. So we kind of see AI, having impact across the board.
That's great. The other thing that stood out to me I know international expansion, a huge growth opportunity great care the success in Mexico, and Europe I'm wondering.
Speaker Change: When we think operationally what are some additional steps that are needed to to drive even further penetration of products already there, but I'm sort of curious operationally what else has to happen to drive even more success. There. It seems like a super Big long term driver for you guys as well.
Sanjit Biswas: We're absolutely excited about it for the long term I think what youll see and what you've seen from us in what you're continuing to see is continued investment. That's in go to market teams customer success support and then on the product side, we're always running our customer feedback we're proud of what we've built so far but some of the newer features and functionality like the low bird strikes and the B P. M S and those kinds of features.
Sanjit Biswas: I think our uniquely relevant in some of these international markets. The way we figure that out is by spending time with our customers, which does take some time.
Speaker Change: Thanks, guys.
Speaker Change: The next question comes from Keith Weiss with Morgan Stanley followed by Alex Zukin with Wolfe.
Speaker Change: Alright. Thank you guys for taking the question and congratulations on a really strong quarter.
Speaker Change: You talked about the $1 15, and 120 in terms of NR and we can definitely see that upsell motion doing doing really well within your customer base.
Speaker Change: If you could maybe give us an update on kind of where we are in terms of what percentage of the business now is coming from upsells into their installed base versus what's coming from net new and is there any change in sort of the distribution model or any evolution in the distribution model as the portfolio expands to.
Sanjit Biswas: Better sort of disaggregate sort of the hunters from the farmers if you will.
Speaker Change: Yeah, Hey, Keith I'll take that.
Speaker Change: It was pretty balanced this quarter. It was it was slightly tilted a little bit more toward expansion and we've seen that over the last kind of few quarters as we continue to move more and more upmarket into some of these larger enterprise deals you know they'll they'll tend to purchase over time I mentioned I think 16 out of 25 of our top 25 customers didn't expansion.
In Q3, and so that's really driving that expansion.
Speaker Change: Something we're really happy about is it's it's happening naturally we don't have a different kind of go to market motion to reward hunters versus farmers, we have sales reps that are.
Speaker Change: Our assigned counts in different territories, and they were able to sign new logos in those territories and they continue to maintain those customer relationships for life and focused on the expansions as well.
Speaker Change: Got it and then maybe if I could sneak in one follow up so on the new intelligence products that you guys were.
We've just released the since our intelligence.
Speaker Change: Our assistant.
Speaker Change: I know some data but are these solutions that would potentially have a like a standalone monetization model or is this just making the platform better it can improve.
Speaker Change: On the utilization of the platform and it's just about just the evolution of adding value for your customers.
Speaker Change: Keith as we've talked about in the prepared remarks. These are products that are in beta we're excited to make them a general available to customers in beta and so we're going to use that as an opportunity to figure out how to price and package them.
Speaker Change: We are also continuing to invest in AI in the core platform. So it's kind of a both strategy, but we'll come back to you all when we have finalized pricing.
Speaker Change: Perfect.
Speaker Change: Thank you so much guys.
Speaker Change: The next question comes from Alex Zukin, with Wolfe fall Bye Kash Rangan with Goldman Sachs.
Speaker Change: Hey, guys. Thanks for taking my question and congrats on another solid quarter I, just maybe wanted to ask about the general.
Speaker Change: The sales cycle as demand environment have you seen any shift clearly had a really really strong beyond conference in a number of international events just momentum linearity in the quarter.
Any kind of.
Speaker Change: Feeling like there was a hesitation because of the election.
Speaker Change: And then I got a quick follow up.
Speaker Change: Hey, Alex its stomach I'll take that yeah. It was it was a pretty consistent quarter in Q3, it's similar to what we've seen in previous quarters. You know as I said, you know we're doing more enterprise deals larger deals and those tend to be more back of the year, our weighted but no real change I did hear anecdotally of a few customers that said that they wanted to delay.
Speaker Change: A purchase decision until after the election results. We've we've already closed a number of those deals in Q4, but that wasn't a material impact on the quarter.
Speaker Change: You know, but it but it was notable.
Super Helpful and then maybe just.
Speaker Change: This time last year.
Speaker Change: You talked a little bit about how to think about.
Speaker Change: Next year.
Speaker Change: In terms of where consensus was I'm just curious given again more.
Speaker Change: Momentum from new products launching some AI monetization opportunities and continued really strong large multi product lands and what seems like a better economy.
Speaker Change: Any kind of initial thoughts or brackets on how we should kind of tune our models. So we don't get ahead of our skis yeah. Yeah. So I mean, yes, we're definitely not in a position yet to give formal guidance for next year.
Speaker Change: As you know Q4 is our largest quarter end and our FY 'twenty six plan, it's going to be heavily influenced by what happens.
Speaker Change: Over the next couple of months and so we really need to kind of get through the quarter and then we can finalize our FY 'twenty six plan.
I would say is that based on our current outlook, we do feel good with where the current consensus dollars are right now I don't think that that needs to change.
Speaker Change: But we'll provide more formal guidance on the next earnings call.
Speaker Change: Excellent. Thank you very much.
Speaker Change: The next question comes from Kash Rangan with Goldman Sachs, followed by Michael churn with Wells Fargo.
Speaker Change: Cash.
Speaker Change: Alright.
Speaker Change: The next question, let's go with Michael Cherny with Wells Fargo fall by Kirk maturing with Evercore.
Speaker Change: Hey, Thanks, I appreciate you take my questions.
Speaker Change: Youre, reaching purely unprecedented territory 1.35 billion and there are still growing 35%. So maybe just zoom out and help us think through the pay our scale. The current product set can address and maybe couple that with what you're seeing from a new frontier as you're highlighting and potential scale or sequence of <unk>.
Dominic Phillips: Dubuque, we could see from those over a longer period of time as well.
Speaker Change: Yeah, so as I.
Dominic Phillips: Michael It's Dominic I as I talked about at our Investor day.
Dominic Phillips: A few months back and we saw so much opportunity within our core products. If I look at just that the vehicle telematics market just in the U S. In a more than 50% of commercial vehicles still aren't using technology.
Dominic Phillips: Technology, if you look at our largest product now video based safety, 90% of commercial vehicles in the U S are not using technology and so there's still so much opportunity for us to land and expand with with our two vehicle vehicle based products and then we've got a whole host of other non vehicle based products that are doing more than $150 million of era.
Dominic Phillips: Our and still growing very quickly that are great opportunities to to land and expand you know impact that we have with customers and so.
Dominic Phillips: We feel really good about about our product set where we're continuing to innovate quickly introducing things like asset tag this year and all of the kind of the AI announcements that came out this week so.
Dominic Phillips: So we feel good about the pace of product innovation.
Dominic Phillips: And maybe just.
Dominic Phillips: A little bit of a different twist on the question that Alex was asking to some degree.
Dominic Phillips: Are there any implications or just scenarios, you're contemplating what the new administration.
Speaker Change: Yeah, we've seen the headlines around things like tariffs, you're very sophisticated in terms of just procurement and supply chain.
Speaker Change: And we have senior navigate turbulent very effectively in prior periods, but just anything that we should be just mindful of and contemplating as we're just suggesting a lot of.
Speaker Change: Varying pieces in terms of the puts and takes of what the government could start to sample them. Thanks, Yeah. I mean things are just still so unclear. It's on it's not we're not sure how things are going to play out. So we're definitely working through a number of our strategies based on different scenarios to your point, we have a lot of experience dealing with some of this we have a really incredible.
Apply changing that team there they're really good at navigating through some of these different scenarios and so we just need to see what happens when the new administration comes in what policies. They they put in place and we're thinking through some of that and we can feed that into the the outlook when we provide that in three months.
Speaker Change: Thanks very much.
Speaker Change: Next question comes from Kurt maturing with Evercore fall by Dylan Becker with William Blair.
Speaker Change: Hi.
Kirk.
Okay, Karen yeah, Okay, I'm sorry about.
Speaker Change: Sanjay I was wondering just said about some of the newer products specifically designed for Europe, and I was kind of curious in terms of is there an application of a similar mindset as you get into bigger verticals, meaning you're designing some of those things are they are very helpful. For your European clients are there verticals like state local or construct.
Speaker Change: And that our customers are now asking for things that are maybe more specific to those verticals is that something you want to pursue at this point in time or are not necessarily yet it keep it more horizontal.
Speaker Change: Yeah, Great question Kirk So we run feedback loops across all of our frontier so the different geographies as well as public sector, but we also spend time trying to understand what's going on in each industry vertical Dominic highlighted construction has been an industry that's been performing really well for us they're digitizing rapidly and it's because they have a lot of assets they're labor intensive.
Speaker Change: But some of those assets are different so they'll have big yellow iron bulldozers or lots of small tools that got left beyond a job sites and they've been great adopters of the new HD 11 product. For example, so we do spend time with each of these different industry is trying to understand their needs 80% of the use case and their needs are very similar across the board I would say about 20.
Speaker Change: Percent, either require partnerships and integrations or maybe some tweaks or additional product features and that's how we think about the investments. Okay. That's helpful. And then Dominic just a follow up here answer from Alex's question on next year. I was just is there anything we should also consider for <unk> due to leap year last year I feel like I'm, asking a lot of leap year questions. These days, but anything we should consider from this.
Speaker Change: Audi perspective, as we go into next year on that front.
Dominic Phillips: No I don't think so I mean, one one day is is not going to have an impact on our business I mean, we run it at weekends and holidays in various quarters and so I.
Dominic Phillips: I don't expect one data to have a material impact okay. Just wanted to thank you all.
Speaker Change: Next question comes from Dylan Becker with William Blair fall by met Bullock with Bofa.
Speaker Change: Hey, gentlemen, I appreciate the call here maybe.
Speaker Change: On the international front, another quarter of successive strength, I think fourth or fifth period here of continued acceleration and increasing contribution of the overall mix I guess, how much of a function of that obviously, the ROI and value proposition is significant but how much of that is further brand awareness can of driving and building out that reference from our base gives.
Speaker Change: The fact that there is a larger than kind of water wider swath of opportunities in the international segment.
Speaker Change: I'll take that one so we were pleased with the growth like you said, it's been sort of accelerating on a kind of a consistent regular basis, but it still feels very early I would say our international market share is still low single digits.
Speaker Change: There is growing awareness, we have more reference customers and to the earlier question. We have more of the sort of product features people are looking for that are unique to these markets like low bridge strikes. For example, so I think we have a great pathway to continue growing for a while but it still feels early.
Speaker Change: Okay. That's great. Thanks, Sanjay and then Tom maybe for you to just given kind of the the exceptional growth in our business here at the scale that we're at I guess, how are you guys thinking about the opportunity for operational improvement and leverage here as we kind of lap. Some of these initial renewal cohorts from those customers that continue to expand what I would think the economics of that are highly <unk>.
Speaker Change: For both of you guys, but how are you thinking about that internally.
Speaker Change: Yeah, I think for US again, it's really a balanced focus on both sustaining high growth and driving more operating leverage we think that we can continue to do both I think near term from an operating leverage perspective, you're right that you know.
Speaker Change: Our largest area of investment is in go to market and therefore as is most likely to be the area of of most leverage the cost of sale on a renew dollar of of ACD is lower than it is when we first land that customer if they expand their relationship with us and so.
Speaker Change: There's still a significant portion you know we're a nine year old company, we sell three to five year contracts and so there still are a large portion of our customers that have not gone through our first renewal and as that happens, we I would expect to see more.
Speaker Change: Natural leverage in go to market.
Speaker Change: Okay, great. Thanks, guys appreciate it.
And the next question comes from Matt <unk> with Bofa fall by Derrick Wood with Cowen.
Speaker Change: Great. Thanks for taking the questions a few for Sanjay if I could first just on the launch of some SAR intelligence in beta last week seemed to be a slight acceleration from the historical cadence of product releases annually beyond is there anything you would attribute that to and would it be fair to assume that the trajectory of new feature and product launches will continue to accelerate going forward.
Speaker Change: Sure.
Speaker Change: Hey, Matt I'll take that as a complement we really work hard to deliver new features and functionality and we don't want to wait for annual customer conference. So it is not something that we're waiting until each June of every year to release features.
Speaker Change: Since our intelligence is a whole kind of portfolio suite of products and features for us and so we're excited to get that out the door. I think you should expect to see US continue a pretty rapid pace of innovation as we continue to invest in R&D and scale our engineering team.
Speaker Change: Great. Thanks, and then just one more on competition since last quarter, there's been quite a few notable transactions in the fleet management industry GPS tracking just bought sonar systems. This week Trimble divestment of telematics business and then our fleet acquired fully complete how should we be thinking about consolidation in the industry and how it.
Speaker Change: Impact competitive dynamics, and then more specifically do you see this as an opportunity to capture additional share as some of those peers are distracted by integration and customers reevaluate some of their vendor choices.
Speaker Change: Yeah, I think if we zoom out this is a large market its got dozens of players in it and over time, we have seen companies be bought and sold and merged together. So I think this is consistent.
Speaker Change: Consistent with what we've seen in the past.
Speaker Change: Our position is unchanged I think we're seeing our customers really rapidly adopt our products because it's a platform as a system of record for them. So it's not just telematics or video based safety of equipment monitoring or the other products that's everything together.
Speaker Change: That's a strong competitive position that we're in and I think it all comes back to can we deliver really clear ROI for our customers, which we are.
Speaker Change: So we kind of aren't changing our strategy relevant relative to some of those moves that have been made in the market.
Speaker Change: And we're going to continue to stay focused on the customer.
Speaker Change: Got it thank you.
Speaker Change: Next question comes from Derrick Wood with TD Cowen followed by Jim Fish with Piper Sandler.
Speaker Change: Great. Thanks, guys.
I guess high level question on the video safety market for you to hedge it.
Speaker Change: The <unk>.
Speaker Change: Video garnering has certainly become more prevalent I know, it's still an early market, but just.
Speaker Change: Is there more market acceptance by drivers with driver facing cameras in.
Speaker Change: Does this make it easier to sell.
And kind of drive more greenfield conversion in this market just would love to hear an update there.
Speaker Change: Yeah. So I think if you <unk>.
Speaker Change: Spend time with drivers everyone's very accustomed to the idea of having a dash camera. It's most often used for exoneration. So it's not so much the inward facing but being able to see what happen. If there was an accident or something.
Speaker Change: Some sort of incident on the road the inward facing side is really around safety and I think both fleets and drivers want to be safe on the roads. There. They are putting their lives at risk everyday when theyre doing their jobs. So we can help break out bad habits like either not wearing a seatbelt or using a mobile phone or being distracted.
Speaker Change: It makes everyone's lives a little bit better. So there is increased awareness and adoption of what these technologies do and then the other pieces because of artificial intelligence, it's not like there's someone in the back office watching all these videos, it's really a computer model sitting in the camera, that's helping provide those real time alerts and I think drivers now understand the technology and that's really it.
Speaker Change: Crease their comfort level with it.
Speaker Change: Got it thanks.
Speaker Change: Just wanted to ask about the motions around the application marketplace. Just what are you seeing around monetization opportunities and how do you see that manifesting over the next couple of years.
Speaker Change: Right now it's a it's really a.
Speaker Change: We have more than 300 technology integrations.
Oem's insurance providers other technology vendors vertical specific applications. There. These are really really important integrations, especially as we get into these large enterprise deals where they want to use the I'm sorry, as their system of record and pulling a bunch of.
Speaker Change: External data, we have more than 85 billion API calls a year and so that I think that's a good metric just to show the kind of the usage that we're seeing with these integrations.
Right now that that's where our plans are to just to have this as a tech technology kind of integration hub and you know I think longer term, we could think about opportunities.
Speaker Change: Opportunities to open this up and you know maybe there is fees or ways to monetize the data or the applications, but but not in the near term.
Speaker Change: Got it thanks guys congrats.
Speaker Change: The next question comes from Jim Fish with Piper Sandler followed by Alexi with J P. Morgan.
Jim Fish: Hey, guys. Thanks for taking my question.
It was exciting to see the 100% quarter over quarter growth in the net new asset tags ACB here can you help us understand the main use cases for that product at this point you know construction was called out at the conference is that we should think about the vast majority of exposure or is there any sort of diversity in those customers.
Speaker Change: Yes, I'll take that one.
Speaker Change: So there's a pretty broad set of use cases for the asset tax is not limited to the construction industry. We see it getting good adoption of field services, and even transportation logistics and so on a if I had to kind of generalize theres three core use cases. The first is finding lost or stolen assets. Those again are across industries.
Speaker Change: The next is helping save frontline workers time to locate assets once they arrive at a job site. They can figure out where something is and then the third is improving asset utilization almost all the industries, we serve their boats.
Speaker Change: Labor intensive, but also asset heavy industries and so if these customers can figure out which call it 10% or 20% of their assets arent well utilize and sell those assets off.
Speaker Change: They can use that cash for more productive purposes. So that's where I think a teaser getting used across the board and that's pretty consistent across industries.
Got it that's helpful. And then maybe one for you you called out go to market is kind of a key focus for investments next year. How can we think about the mix of rep hiring in terms of domestic versus international given some of the traction that we're seeing in the international space So far.
Yeah, I mean, I think our capital allocation is going to be focused on primarily on go to market, but also on on R&D.
Speaker Change: I think the the overall number of.
Speaker Change: Salespeople that we will hire what will it will be higher and U S. Just because that's a larger part of our business.
Speaker Change: The the the year over year growth, maybe a little bit higher than international just because it's a smaller number and a big opportunity but.
Speaker Change: As I kind of said earlier, we really just need to get through the fourth quarter and we'll have a better outlook for you know for next year and you make our our plans at that time.
Speaker Change: Okay then.
Next question comes from Alexia <unk> with J P. Morgan followed by Daniel gesture with BMO.
Speaker Change: Hi, This is at least kinda on for Alexia go glass, you alluded to renewables coming up given the three to five year contract length, but we were wondering if you could talk more about the renewal rates, you're currently seeing and the pricing power that you have during those renewals given the demand environment. Thank you yep.
Speaker Change: So the renewal rates have been very strong it there they're embedded in the net retention rate metrics that I gave of kind of 115 and 120 for core large customers. So that that's been.
Speaker Change: Our consistent and.
Customers will we we've talked earlier about that expansion as being a big part of our business customers will expand throughout the life of the contract, but they don't they definitely do it at.
Speaker Change: Time of renewal as well so that's a good opportunity to have broader conversations with customers.
Speaker Change: And we've seen a lot of our success out of that.
Speaker Change: Got it thank you so much.
Speaker Change: The next question comes from Daniel Jester with BMO.
Speaker Change: Biogen aid with trust.
Dan.
Speaker Change: Okay, Let's go next to John aid with tourists.
Speaker Change: Sanjay just wanted to ask you about data security and privacy and if they are becoming an important part of discussions with customers is the fort Mcmurray expands with increasing number of connected devices more disclosure and compliance requirements as cyber security in the area, where you can potentially differentiate.
Speaker Change: Yourself from some of the competition, especially with some of the certification certifications you have got and we're working on.
Speaker Change: So just kind of overall I just wanted to get your thoughts about how youre thinking about security and how customers are thinking about it.
Speaker Change: Absolutely. So it is an area, we differentiate and we at our scale are able to invest in R&D.
Speaker Change: At a pretty significant level and we have a very large security related team focused on these sorts of risk factors and attacks.
Speaker Change: And I think it's an area that our large enterprise customers, who are very sophisticated are asking about and we're able to differentiate them. So we have a number of certifications are whether that's our ISO 27001 certification or Ah ones related to.
Speaker Change: State and federal or state and local government certifications. So we're going to keep investing there and I think it's a really important area for our customers to be aware of because these are the critical infrastructure.
Companies are power planet. So there of course targets for these attacks and we've been able to do a good job of helping keep them safe.
Speaker Change: Great. Thank you.
Speaker Change: Our next question comes from Mark with Loop capital and then we'll come back to check with that cash in India.
Speaker Change: Mark.
Mark: Hi can you hear me Okay. Yes, we can hear you okay. Great. Thanks for taking my question and nice job on the quarter.
Mark: Could you just talk a little bit about the uptake rates excuse me uptake rates youre seeing with your connected workflows and attractive forms products also maybe just provide an example, too of some new unique use cases that you're seeing with those products.
Speaker Change: Yeah. So uptake has been good these are relatively newer products in terms of connected workflows and forms all of our customers have some sort of pen and paper processes are looking digitize or monitor or modernized. So that's what we're really selling into some of the newer features that we released as part of the sensor intelligence push earlier this week I think erode.
Speaker Change: Isn't there visual intelligence is a great example, you can basically take a photograph of a form we will automatically identify the fields within a fill out the workflow fields and then we can even do things like understand what the risks are in the job site photo. So that's a brand new functionality. We just released a couple of days ago and the beta testers have been.
Speaker Change: <unk> really thrilled with it so we're excited to keep doing more of that.
Speaker Change: Great. Thank you.
Speaker Change: Okay. Our last question comes from Dan Jester with BMO.
Speaker Change: Dan.
Speaker Change: Kidney kidney army broken here you.
Speaker Change: Alright, thank you.
Speaker Change: So that was about that earlier, so I wanted to ask about the public sector and the strength that you called out this quarter I guess I know that was an area of focus over the past year to make investments to build out to get into the environment is that what we're seeing here or is there anything else you'd call out on the strike brought that category. Thank you.
Yeah, I would just say it's been an area of focus and continued investment in these deals can take time to tell Landon, we saw culmination of that happened in Q3 with with a lot of success in <unk>.
Speaker Change: A record 16 deals over 100, K M and <unk> and the highest.
Net interest he makes who've seen the public sector and then the last for yourselves really strong quarter.
Speaker Change: Okay, great. Thank you.
Speaker Change: Alright. So this includes the question and answer portion. Thank you all for attending our Q3 fiscal year 2025 earnings call before I. Let you go have a few for announcements we will be participating the following bus tours in San Francisco The Piper Sandler bus tour in December 10th the F B and virtual Tech Conference on December 11th The Island Company Bus tour on December 12.
Speaker Change: Goldman Sachs and Bofa bus tours on January seven the Evercore bus tour on Germany, and the Jefferies Bus tour on January 9th we hope to see at one of these events. That's it for today's meeting if you have any follow up questions. You can email us at IR at <unk> Dot com by everyone.