Samsara S-1 Teardown

The below appeared as a thread on my Twitter account @kevindstevens.

How are field operations in some of the largest industries increasing connectivity? The answer is companies like Samsara.

Last week, Samsara filed its S-1 for IPO. Here’s a quick look at what the business does and how its performance looks to date.

Samsara builds software to manage real asset operations in truck fleets, mining, supply chain and oil and gas.

The software provides safety, dispatch, logistics, and workflow apps that can monitor equipment and provide visibility into operating sites.

Samsara’s growth has been incredibly strong over the last three years.

2020:$120M
2021:$249M (108% growth)
2022E: $432M (79% growth)

LTM revenues are $379M and current ARR is nearly $500M in just 6 years!!!!

Like many businesses serving the industrial sectors, once Samsara lands they are sticky - net revenue retention is >115%.

Gross margins are improving steadily (60% headed to 70% by 2022) and the LTV:CAC ratio is 8:1.

Land and expand is the name of the game.

Sales & cash efficiency metrics are improving too.

The business is growing efficiently for a software product serving industrial segments.

We often look for a magic # of around 1 in enterprise SaaS, but the number is generally lower in industrials. Samsara is at .6 & improving.

Samsara has adopted a strategy of focusing on large, long-term contracts. The customer base is 25,000 strong and 13,000 spend more than $5,000 in ARR.

715 of those spend more than $100,000. 52% of customers buy at least 2 products.

We measure the Rule of 40 in SaaS by adding FCF margin to revenue growth. Samsara sits at a healthy 31% - anything over 40 for general SaaS is considered extremely strong.

Again, industrial-focused SaaS is often adjusted down given the nature of the segments served.

Samsara should perform well in the public markets, it’s a market leader w/ strong revenue growth & improving operational efficiency metrics.

Using the Energize database of public market comps, the initial valuation is likely to be $25B on the low end and $35B on the high end.