Enterprise

With its IPO in the rearview mirror, Samsara wants to steer beyond fleet management IoT

Cloud IoT data and analytics provider Samsara went public today, but despite steady growth it will face challenges in its mission to move outside the world of fleet management.

The New York Stock Exchange welcomes executives and guests of Samsara in celebration of their IPO

The company has a valuation of about $12 billion.

Photo: NYSE

Samsara’s Chief Product Officer Kiren Sekar wasn’t expecting a chant of “IOT! IOT! IOT!” Wednesday morning when the Internet of Things company’s CEO Sanjit Biswas set off the New York Stock Exchange bell, sealing its publicly traded status. But the chant — which not only represents Samsara’s business but its actual IOT ticker symbol — was indicative of investor excitement that led the company toward a valuation of about $12 billion.

Samsara priced its initial public offering of 35 million shares at $23 apiece, raising $805 million. Its path to public-company status seemed in doubt just over year ago, when it raised $400 million in a down round that valued the company at around $5.4 billion.

Samsara got its start just six years ago and has built its customer base through a primary focus: IoT software that helps companies manage fleets of vehicles with artificial intelligence. The company provides GPS-based sensors, in-car cameras and analytics software to customers, helping them keep track of the people driving them and monitoring the vehicles themselves for maintenance and fuel efficiency. But all sorts of companies own and rely on vehicles to conduct business, and that has helped Samsara connect with customers in an array of industries, Sekar said.

“We started working with customers’ fleets because fleets wind up being the backbone of other industries,” Sekar told Protocol after the opening bell sounded this morning. “They all use fleets to move people and materials,” he said. “It’s a great way for us to engage with customers.”

Since then, the company has evolved like so many software companies do, tacking on new features and capabilities based on client needs. Samsara has added tools for gauging driver safety and monitoring heavy equipment and construction sites, and offers mobile apps to help its customers move from paper to digital. “We’ve expanded through concentric circles over time,” said Sekar.

Ultimately the company, with clients including truck-rental provider Penske and restaurant-supplier Sysco, wants to be the IoT, AI and data-analysis layer across a company’s entire spectrum of physical assets and operations. For now, Sekar declined to give examples of particular products in development, though the cash infusion from the IPO today gives him a lot to work with.

Still, he said the company has added more than 200 features since it started, and that will continue. “We’ll keep up that pace,” he said.

AI is a key part of Samsara’s plan. Essentially, IoT sensors are data-generation and collection devices, producing an important raw material for building AI models. For Samsara, that data comes in the form of trillions of vehicle-related data points and millions of hours of dash-cam video processed in its platform.

The idea is to find more ways to use that data to build AI systems that do things like monitor driver distraction and safety, or fuel and equipment efficiency and sustainability. For instance, driver safety AI might not only use video along with facial- and image-recognition technology to detect when a driver is peering down at a phone, but it could also incorporate other data points such as vehicle speed, the average amount of space between a fleet vehicle and the vehicle ahead of it on the highway or the frequency of a driver’s harsh braking and acceleration.

“We have all of these different signals we can pull in,” said Sekar. And, he said, that same data used to assess driver safety can apply to vehicle maintenance to address unplanned downtime of company vehicles or large freight trucks, for example.

According to its S-1 filing with the SEC, Samsara had more than 13,000 customers with subscriptions to its Connected Operations Cloud as Oct. 30. The company said it had 1,490 employees, 694 of whom were salespeople.

Samsara “has found a sweet spot in vehicle telematics and driver-safety detection,” said Brendan Burke, senior emerging technology analyst at PitchBook. Partnerships with vehicle makers such as John Deere, Ford and Volvo — companies that embed Samsara sensors and connectivity services into their vehicles — have put Samsara in front of a lot of existing and potential customers. Data integrations with around 150 third-party apps in Samsara’s own app marketplace have helped disseminate use of the Samsara platform too.

Now, Sekar said, Samsara is starting to see customers integrate its data with other systems, such as HR and payroll systems.

But the company faces challenges in its goal to expand beyond fleet management. Samsara itself said in its pre-IPO filing that it wants to attract more customers that spend at least $100,000 in annual recurring revenue per year. To upsell or attract more big-ticket customers, Samsara must convince current customers to attach more sensors or cameras to more vehicles, equipment or other physical assets, or get them to pay more to turn on additional software features.

Even surviving in the fleet-management services area where Samsara is anchored could be difficult. For one thing, fleet-tracking services are somewhat commodified; for some customers, it comes down to price. For example, a service called Business Fleet lets people “compare and save on GPS fleet vehicle-tracking solutions” by filling out a form to receive quotes from Samsara and competitors such as Verizon Connect, Shell Fleet Solutions and Azuga.

Despite its gradual product expansion and deepening ties to some customers’ operations and data, branching out beyond the fleet-management arena in a way that makes Samsara the go-to platform for a company’s entire universe of physical operations could be tricky, said Burke.

“The company’s expansion plans to other segments of IoT have not been matched by revenue diversification,” Burke said in an email. He noted the company’s self-reporting showing that it derived nearly 88% of its annual recurring revenue from its driver safety and fleet telematics products, for example.

“In this niche, the company faces headwinds from telematics integration by automakers, which is limited currently but we expect to reach 50% of new vehicles over the next three years,” said Burke. “Samsara may need to prove that its software can expand outside of fleet management before the company is treated as a high-growth SaaS vendor by public markets.”

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