Samsara (IOT) - 2023 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for the period ended July 30, 2022, reflect continued revenue growth, widening net losses, and a slight decrease in total assets, with negative operating cash flow Condensed Consolidated Balance Sheets As of July 30, 2022, total assets slightly decreased to $1.53 billion, primarily due to reduced cash and cash equivalents, while total liabilities remained stable and stockholders' equity declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | July 30, 2022 | January 29, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $826,138 | $921,218 | | Total current assets | $1,035,989 | $1,100,167 | | Total assets | $1,529,023 | $1,567,929 | | Liabilities & Equity | | | | Deferred revenue, current | $238,969 | $203,185 | | Total liabilities | $575,885 | $578,982 | | Accumulated deficit | ($1,056,219) | ($920,950) | | Total stockholders' equity | $953,138 | $988,947 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the three and six months ended July 30, 2022, revenue grew significantly year-over-year, but net losses widened considerably due to increased operating expenses, particularly stock-based compensation Statement of Operations Highlights (in thousands) | Metric | Three Months Ended July 30, 2022 | Three Months Ended July 31, 2021 | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $153,523 | $101,043 | $296,168 | $188,774 | | Gross Profit | $109,266 | $72,675 | $212,293 | $134,777 | | Loss from Operations | ($65,782) | ($31,229) | ($135,987) | ($69,827) | | Net Loss | ($64,281) | ($31,373) | ($135,269) | ($69,811) | Condensed Consolidated Statements of Cash Flows For the six months ended July 30, 2022, net cash used in operating activities increased to $85.8 million, driven by net loss partially offset by non-cash charges, with investing activities using $16.9 million and financing activities providing $8.0 million Cash Flow Summary (in thousands) | Activity | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($85,760) | ($81,914) | | Net cash used in investing activities | ($16,930) | ($6,751) | | Net cash provided by (used in) financing activities | $8,009 | ($1,004) | | Net decrease in cash | ($95,077) | ($89,669) | Notes to Condensed Consolidated Financial Statements Key notes detail accounting policies, revenue recognition, and commitments, highlighting Remaining Performance Obligations of $1.187 billion and a significant increase in stock-based compensation post-IPO - Remaining Performance Obligations (RPO) as of July 30, 2022, were $1,187.0 million, with approximately $577.0 million expected to be recognized as revenue over the next 12 months[58] - In June 2022, the company committed to spend at least $275.0 million on cloud infrastructure services between July 2022 and June 2027[61] Stock-Based Compensation Expense (in thousands) | Period | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :--- | :--- | :--- | | Total Expense | $87,952 | $2,767 | Revenue by Geography (Six Months Ended, in thousands) | Region | July 30, 2022 | July 31, 2021 | | :--- | :--- | :--- | | United States | $264,123 | $169,832 | | Other | $32,044 | $18,942 | | Total | $296,168 | $188,774 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 57% revenue growth to customer expansion, noting strong growth in key business metrics, but significant increases in operating expenses led to a wider net loss, while liquidity remains strong Key Business Metrics | Metric | As of July 30, 2022 | As of July 31, 2021 | | :--- | :--- | :--- | | Annual recurring revenue (ARR) | $662,777,000 | $436,889,000 | | Customers > $100,000 ARR | 989 | 615 | - Revenue for the six months ended July 30, 2022, increased by 57% to $296.2 million, compared to $188.8 million in the prior year period, driven by new customer acquisition and expansion within the existing customer base[98][122] - Operating expenses for the six months ended July 30, 2022, rose to $348.3 million from $204.6 million year-over-year, largely due to increased stock-based compensation and hiring in sales, marketing, and R&D[129][131][133] - The company's liquidity position remains strong with $826.1 million in cash and cash equivalents as of July 30, 2022, following its IPO in December 2021 which raised net proceeds of $846.7 million[152][153] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company identifies primary market risks as interest rate, foreign currency, and inflation fluctuations, but does not anticipate a material impact from hypothetical 10% changes in rates or from inflation to date - The company's primary market risks are related to interest rates, foreign currency exchange, and inflation[170] - A hypothetical 10% change in interest rates or foreign currency exchange rates is not expected to have a material impact on the company's financial statements[171][172] - Management does not believe inflation has had a material impact on the company's financial statements, but notes that an inability to offset higher costs through price increases could become a future risk[173] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of July 30, 2022, with no material changes in internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[175] - No material changes were identified in the company's internal control over financial reporting during the most recently completed fiscal quarter[176] PART II—OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings but does not believe any current litigation would have a material adverse effect on its business or financial condition - The company is not currently a party to any litigation that it believes would have a material adverse effect on its business or financial condition[179] Item 1A. Risk Factors The company outlines comprehensive business risks, including a history of net losses, intense competition, supply chain dependencies, financial fluctuations, and risks related to its multi-class stock structure and evolving regulations - Business Risks: The company has a history of losses and may not achieve profitability. It faces intense competition and is dependent on a limited number of manufacturers and suppliers for its IoT devices, creating supply chain risk[193][213][222] - Security & Technology Risks: A security breach affecting customer data or IoT devices could harm the company's reputation. The business also relies on third-party cellular and GPS networks, and any disruption could adversely affect its solution[226][237] - Regulatory Risks: The business is subject to stringent and changing laws related to data privacy (e.g., GDPR, CCPA), which could increase costs and require modifications to its applications. Failure to comply with anti-corruption laws like the FCPA could also lead to penalties[290][298] - Stock Ownership Risks: The company's stock price may be volatile. Its multi-class stock structure concentrates voting control with pre-IPO stockholders, including the co-founders, limiting the influence of Class A stockholders[331][334] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities and confirms that the $846.7 million net proceeds from its December 2021 IPO are being used as planned, with no material changes - There were no unregistered sales of equity securities in the period[375] - The company completed its IPO on December 17, 2021, with an underwriter option exercise on January 13, 2022, resulting in total net proceeds of $846.7 million[376] - There has been no material change in the planned use of proceeds from the IPO as described in the final prospectus[377] Item 3. Defaults Upon Senior Securities This section is not applicable Item 4. Mine Safety Disclosures This section is not applicable Item 5. Other Information No other information is reported in this section Item 6. Exhibits This section provides an index of exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications - Lists exhibits filed with the report, including CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[384]