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What changed in Samsara Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Samsara Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+509 added−566 removedSource: 10-K (2023-03-21) vs 10-K (2022-03-30)

Top changes in Samsara Inc.'s 2023 10-K

509 paragraphs added · 566 removed · 418 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

97 edited+14 added−32 removed73 unchanged
Biggest changeFor more information, see the section titled “Risk Factors—Risks Related to Our Business, Industry, and Operations—Our dependence on a limited number of joint design manufacturers and suppliers of manufacturing services and critical components within our supply chain may adversely affect our ability to sell subscriptions to our Connected Operations Cloud and our results of operations.” We expect that the need for our IoT devices will diminish over time as physical asset OEMs begin to produce connected assets that can connect to our Connected Operations Cloud without additional IoT devices provided by us. 17 Table of Contents Privacy and Security by Design We have designed and developed our Connected Operations Cloud from the ground up to be private and secure.
Biggest changeWe expect that the need for our IoT devices will diminish over time as physical asset OEMs begin to produce connected assets that can connect to our Connected Operations Cloud without additional IoT devices provided by us. 14 Table of Contents Security and Privacy by Design We have designed and developed our Connected Operations Cloud from the ground up with privacy and security in mind.
In addition, the cost and availability of sensors, compute capability, storage, video, and analytical processing have prevented widespread analysis of operations data. However, with advancements in IoT connectivity, cloud computing, video imagery, and AI, we believe industries that depend on physical operations are at the precipice of a massive wave of digital adoption. Samsara is enabling this transformation.
In addition, the cost and availability of sensors, compute capability, storage, video, and analytical processing have prevented widespread analysis of physical operations data. However, with advancements in IoT connectivity, cloud computing, video imagery, and AI, we believe industries that depend on physical operations are at the precipice of a massive wave of digital adoption. Samsara is enabling this transformation.
To ensure easy adoption and seamless access for our developers, we have created “Getting Started” guides for all our main integration types and we maintain a developer metrics page to monitor integration health, provide a newsletter and discussion forum to share best practices, and have an API explorer feature in our documentation which allows developers to try out API calls with their own data before building a full deployment.
To ensure easy adoption and seamless access for our developers, we have created “Getting Started” guides for all of our main integration types and we maintain a developer metrics page to monitor integration health, provide a newsletter and discussion forum to share best practices, and have an API explorer feature in our documentation, which allows developers to try out API calls with their own data before building a full deployment.
The unique approaches and perspectives of our team members help us solve complex problems. Employees across the company are encouraged to participate in diversity and inclusion-related programming and to get involved in Samsara’s many employee resource groups and clubs. At Samsara, we also build for the long-term by extending our community beyond our corporate walls.
The unique approaches and perspectives of our team members help us solve complex problems. Employees across the company are encouraged to participate in diversity and inclusion-related programming and to get involved in Samsara’s many employee resource groups. At Samsara, we also build for the long term by extending our community beyond our corporate walls.
Our customers feel like they are contributing to their own success, and in turn, continue to provide feedback as our Connected Operations Cloud evolves. This flywheel effect accelerates innovation across all aspects of our solution. • Partner Ecosystem. Our Connected Operations Cloud serves as the central hub for a robust ecosystem of partner connections.
Our customers feel like they are contributing to their own success, and in turn, continue to provide invaluable feedback as our Connected Operations Cloud evolves. This flywheel effect accelerates innovation across all aspects of our solution. • Partner Ecosystem. Our Connected Operations Cloud serves as the central hub for a robust ecosystem of partner connections.
Continued growth in integrations will strengthen our ecosystem, further increasing the opportunity to attract customers that prioritize interoperability with their existing applications. We believe that additional partnerships will further enhance our distribution capabilities. • Expand Internationally. A key focus of our company is to continue to expand our global reach.
Continued growth in integrations will strengthen our ecosystem, further increasing the opportunity to attract customers that prioritize interoperability with their existing applications. We believe that additional partnerships will also enhance our distribution capabilities. • Expand Internationally. A key focus of our company is to continue to expand our global reach.
We partner with leading OEMs to capture data from their siloed clouds into our Connected Operations Cloud, where we enrich and analyze the data and enable customers to benefit from our Applications without needing to install an aftermarket IoT device in their vehicle. Apps and Driver Workflows • Driver Workflow.
We partner with leading OEMs to capture data from their siloed clouds into our Connected Operations Cloud, where we enrich and analyze the data and enable customers to benefit from our Applications without needing to install an aftermarket IoT device in their vehicle. Apps and Driver Workflows • Driver Workflows.
We have created robust contingencies for data storage and low-power configurations to maintain a consistent data chain in the event of poor cellular connectivity or low power scenarios. The result of all of these connectivity configurations is more data in our Data Platform.
We have created robust contingencies for data storage and low-power configurations to maintain a consistent data chain in the event of poor cellular connectivity or low power scenarios. The result of these connectivity configurations is more data in our Data Platform.
Additionally, we bring operational IoT data together with our customers’ IT data by integrating with their enterprise resource planning, transportation management systems, payroll, human capital management, and work order applications.
Additionally, we bring operational IoT data together with our customers’ IT data by integrating with their enterprise resource planning, transportation management systems (“TMS”), payroll, human capital management, and work order applications.
Step-by-step coaching based on real driver behavior improves the effectiveness of live coaching sessions, whether they are conducted in person or remotely via mobile devices.
Step-by-step coaching based on real driver behavior improves the effectiveness of live coaching sessions, whether they are conducted in person or remotely via mobile devices. • Proactive Driver Coaching.
However, some of our competitors have substantially greater financial resources, greater brand recognition, larger sales forces and marketing budgets, as well as broader distribution networks. Large corporations, in particular, may be able to utilize their distribution networks and existing relationships to offer fleet management solutions in addition to solutions in other verticals already being provided to customers.
However, some of our competitors have substantially greater financial resources, greater brand recognition, larger sales forces and marketing budgets, as well as broader distribution networks. Large enterprises, in particular, may be able to utilize their distribution networks and existing relationships to offer fleet management solutions in addition to solutions in other verticals already being provided to customers.
We are also able to assist our customers in demonstrating their compliance with applicable data protection and privacy regulations through the use of template accountability documentation (e.g., data protection impact assessments and supporting policies), which can be configured and tailored by customers to address their particular use cases and organizational requirements.
We are also able to assist our customers in demonstrating their compliance with applicable data protection and privacy laws and regulations through the use of template accountability documentation (e.g., data protection impact assessments, supporting policies, and data transfer impact assessments), which can be configured and tailored by customers to address their particular use cases and organizational requirements.
Customers gain real-time remote visibility across all of their connected sites from an intuitive mobile app, enabling users to investigate incidents practically anytime and from any location. 16 Table of Contents Our Technology A Modern, Scalable Platform Our Connected Operations Cloud is purpose-built to scale and leverage modern technology.
Customers gain real-time remote visibility across all of their connected sites from an intuitive mobile app, enabling users to investigate incidents practically anytime and from any location. 13 Table of Contents Our Technology A Modern, Scalable Platform Our Connected Operations Cloud is purpose-built to scale and leverage modern technology.
The principal competitive factors in the markets in which we operate include: • All-in-one software and hardware solution that addresses specific industry needs; • Cloud-native applications whose feature set is effective, extensible, and evolving; • Rapid development cycle based on customer feedback; • High-quality, relevant, and actionable insights for operational managers and workers; • Scalable data platform that can ingest and process data from various sources and apply powerful analytics across multiple data sets; • Ease of adoption from installation to usability for back-office administrators and field workers; 19 Table of Contents • Reliability and security; • Quality and responsiveness of customer support channels; • ROI: Price for software, devices, installation and support relative to achieved cost savings; • Brand awareness, reputation and trust in the provider’s services; and • Strength of sales, marketing and channel partner relationships.
The principal competitive factors in the markets in which we operate include: • All-in-one software and hardware solution that addresses specific industry needs; • Cloud-native applications whose feature set is effective, extensible, and evolving; • Rapid development cycle based on customer feedback; • High-quality, relevant, and actionable insights for operational managers and workers; • Scalable data platform that can ingest and process data from various sources and apply powerful analytics across multiple data sets; 16 Table of Contents • Ease of adoption from installation to usability for back-office administrators and field workers; • Reliability and security; • Quality and responsiveness of customer support channels; • Return on investment: Price for software, devices, installation and support relative to achieved cost savings; • Brand awareness, reputation and trust in the provider’s services; and • Strength of sales, marketing and channel partner relationships.
Video-Based Safety Our fleet safety Applications primarily compete with safety-focused vendors like Lytx and SmartDrive, who provide standalone camera and coaching tools. Vehicle Telematics Our telematics Applications primarily compete with traditional vendors like Verizon Connect and Geotab, who provide a set of tools and reports focused on driver management, intermittent GPS tracking, asset tracking, and compliance.
Video-Based Safety Our fleet safety Applications primarily compete with vendors like Lytx and SmartDrive, who provide standalone camera and coaching tools. Vehicle Telematics Our telematics Applications primarily compete with vendors like Verizon Connect, Geotab, and Omnitracs, who provide a set of tools and reports focused on driver management, intermittent GPS tracking, asset tracking, and compliance.
Our ecosystem includes over 155 third-party integrations in the Samsara App Marketplace, a portal through which customers can connect our Applications to external applications. Our Experts Marketplace features a network of certified system integrators, consultants, and implementation partners who provide services to our customers.
Our ecosystem includes over 220 third-party integrations in the Samsara App Marketplace, a portal through which customers can connect our Applications to external applications. Our Experts Marketplace features a network of certified system integrators, consultants, and implementation partners who provide services to our customers.
Our ELD is registered with the Federal Motor Carrier Safety Administration (FMCSA) and allows customers to simplify HOS compliance. Fleet operators access key information needed to meet stringent regulations while lowering the costs of compliance. Equipment Monitoring • Location, Utilization, and Theft Monitoring.
Our ELD is registered with the Federal Motor Carrier Safety Administration (“FMCSA”) and allows customers to simplify HOS compliance. Fleet operators access key information needed to meet stringent regulations while lowering the costs of compliance. Equipment Monitoring • Location, Utilization, and Theft Monitoring.
We estimate that these industries represented over 40% of the global GDP in 2020. Yet historically, these industries have been underserved by technology, leaving them heavily reliant on manual processes and legacy systems that are siloed and lack cloud connectivity.
We estimate that these industries represented over 40% of the global GDP in 2022. Yet historically, these industries have been underserved by technology, leaving them heavily reliant on manual processes and legacy systems that are siloed and lack cloud connectivity.
Our Connected Operations Cloud includes: • Our Data Platform, which ingests, aggregates, and enriches data from our IoT devices and a growing ecosystem of connected assets and third-party systems, and which has embedded capabilities for AI, workflows and analytics, alerts, API connections, and data security and privacy; and 10 Table of Contents • Applications for video-based safety, vehicle telematics, apps and driver workflows, equipment monitoring, and site visibility.
Our Connected Operations Cloud includes: • Our Data Platform, which ingests, aggregates, and enriches data from our IoT devices and a growing ecosystem of connected assets and third-party systems, and which has embedded capabilities for AI, workflows and analytics, alerts, API connections, and data security and privacy; and • Applications for Video-Based Safety, Vehicle Telematics, Apps and Driver Workflows, Equipment Monitoring, and Site Visibility.
The digital transformation of physical operations won’t happen overnight, and we are committed to working at a sustained pace to help make it happen. • Adopt a growth mindset . We are curious and have an entrepreneurial spirit that leads us to seek out new challenges, embracing lessons learned along the way. 13 Table of Contents • Be inclusive .
The digital transformation of physical operations won’t happen overnight, and we are committed to working at a sustained pace to help make it happen. • Adopt a growth mindset . We are curious and have an entrepreneurial spirit that leads us to seek out new challenges, embracing lessons learned along the way. • Be inclusive .
We do this by incorporating edge computing capabilities into our products for the unique requirements of physical operations. For example, we ingest video data and immediately analyze it at the edge to alert drivers or security operators of tailgating, safety hazards, unsafe work environments and distracted driving in real-time.
We do this by incorporating edge computing capabilities into our products for the unique requirements of physical operations. For example, we ingest video data and immediately analyze it at the edge to coach drivers or security operators about tailgating, safety hazards, unsafe work environments and distracted driving in real-time.
We work with a network of reseller partners and also have partnerships with insurance providers and select vendors in the third-party logistics (3PL) network. We have also partnered with insurance companies, who have become an important new partner constituency whose end-customers can leverage our Connected Operations Cloud in order to reduce insurance premiums and improve safety.
We work with a network of reseller partners and also have partnerships with insurance providers and select vendors in the third-party logistics (3PL) network. We have also partnered with insurance companies, who have become an important partner constituency whose end customers can leverage our Connected Operations Cloud in order to improve safety.
We rely on a combination of patent, copyright, trademark and trade secret laws in the United States and other jurisdictions, as well as license agreements, confidentiality procedures, non-disclosure agreements with third parties, and other contractual protections, to protect our intellectual property rights, including our proprietary technology, software, know-how and brand.
We rely on a combination of patent, copyright, trademark and trade secret laws in the United States and other jurisdictions, as well as license agreements, confidentiality procedures, non-disclosure agreements, and other contractual protections, to protect our intellectual property rights, including our proprietary technology, software, know-how and brand.
We will continue to educate our customers on the benefits of using our other Applications and leveraging our Connected Operations Cloud. • Continuous Customer-centric Innovation and Product Releases. By leveraging our customer-centric innovation flywheel, we are able to continuously build new Applications and release new features for our customers based on their direct feedback.
We will continue to educate our customers on the benefits of using our other Applications and leveraging our Connected Operations Cloud. 11 Table of Contents • Continuous Customer-centric Innovation and Product Releases. By leveraging our customer-centric innovation flywheel, we are able to continuously build new Applications and release new features for our customers based on their direct feedback.
We believe that we are well positioned to capitalize on the U.S. 5G rollout and the capabilities that a more robust network will provide, particularly in leveraging AI and video.
We believe that we are well positioned to capitalize on the U.S. 5G rollout and the capabilities that a more robust network can provide, particularly in leveraging AI and video.
The end result is more efficient use of time and resources, and the ability to make real-time decisions. For example, our routing and dispatching application enables our customers to save on fuel consumption by finding more efficient routes using real-time data on road conditions and delivery delays.
The result is more efficient use of time and resources, and the ability to make real-time decisions. For example, our routing and dispatching application enables our customers to save on fuel consumption by identifying more efficient routes using real-time data on road conditions and delivery delays.
This includes monitoring carbon emissions, identifying fuel and energy waste, reducing paper waste, decreasing food waste, monitoring environmental pollutants, and using data to accelerate the broader adoption of electric vehicles in commercial fleets. Similarly, our platform helps product manufacturers perform quality assurance in real-time to reduce wasted product by catching production or quality issues immediately.
This includes monitoring carbon emissions, identifying fuel and energy waste, reducing paper and food waste, monitoring environmental pollutants, and using data to accelerate the broader adoption of electric vehicles in commercial fleets. Similarly, our platform helps product manufacturers perform quality assurance in real-time to reduce wasted product by detecting production or quality issues.
Our solution enables operations to achieve higher utilization of physical assets, reduced need for manual oversight and judgment, improved safety outcomes, lower insurance costs, fuel and electricity savings, emissions reductions, less unplanned downtime, efficiencies from routing and scheduling, minimized compliance costs, and automation of manual processes. Our Connected Operations Cloud benefits from powerful network effects.
Our system of record enables operations to achieve higher utilization of physical assets, reduced need for manual oversight, improved safety outcomes, lower insurance costs, fuel and electricity savings, emissions reductions, less unplanned downtime, efficiencies from routing and scheduling, minimized compliance costs, and automation of manual processes. Our Connected Operations Cloud benefits from powerful network effects.
Further, we have established referral programs with some of our insurance and other partners, which act as an additional lead generation source. 18 Table of Contents Partners We have built a robust ecosystem that includes over 155 integration partners in our Samsara App Marketplace, powered by an active developer community.
Further, we have established referral programs with some of our insurance and other partners, which act as an additional lead generation source. 15 Table of Contents Partners We have built a robust ecosystem that includes over 220 integration partners in our Samsara App Marketplace, powered by an active developer community.
See the section titled “Risk Factors—Risks Related to Government Regulation” for additional information about the laws and regulations to which we are subject and the risks to our business associated with such laws and regulations. 21 Table of Contents Available Information Our website address is located at samsara.com and our investor relations website is located at investors.samsara.com.
See the section titled “Risk Factors—Risks Related to Government Regulation” for additional information about the laws and regulations to which we are subject and the risks to our business associated with such laws and regulations. Available Information Our website address is located at samsara.com and our investor relations website is located at investors.samsara.com.
Our lead generation engine supports our growth targets by leveraging customer success stories through field events, webinars, case studies, press engagement, and more. To drive large customer growth, we leverage targeted, account-based marketing tactics. In addition to our internal sales team, we also have a network of reseller partners who sell our products to customers.
Our lead generation engine supports our growth targets by hosting and participating in field events, producing webinars, leveraging customer success case studies, press engagement, and more. To drive large customer growth, we leverage targeted, account-based marketing tactics. In addition to our internal sales team, we also have a network of reseller partners who sell our products to customers.
We provide an end-to-end solution for operations: Our solution connects physical operations data to our Connected Operations Cloud, which consists of our Data Platform and Applications. Our Data Platform ingests, aggregates, and enriches data from our IoT devices and a growing ecosystem of connected assets and third-party systems, and makes the data actionable for use cases through our Applications.
Our solution connects physical operations data to our Connected Operations Cloud, which consists of our Data Platform and Applications. Our Data Platform ingests, aggregates, and enriches data from our IoT devices and a growing ecosystem of connected assets and third-party systems, and makes the data actionable for use cases through our Applications.
Combining multiple data inputs with contextual insight enables our customers to make a determination on whether the driver’s braking habits should be reviewed. In addition, we recognized the advancements in computing capabilities and have harnessed the improved level of IoT computation to deliver real-time access to complex analyses that our customers need instantaneously.
Combining multiple data inputs with contextual insight enables our customers to decide whether the driver’s braking habits should be reviewed. In addition, we recognized the advancements in computing capabilities and have harnessed the improved level of IoT computation to deliver real-time access to complex analyses that our customers need instantaneously.
We build relationships with our customers, look to solve problems, and deliver a great customer experience. • Build for the long term . We are building an enduring company that makes a positive impact on the world.
We build relationships with our customers, look to solve problems, and deliver a great customer experience. 10 Table of Contents • Build for the long term . We are building an enduring company that makes a positive impact on the world.
Our Data Platform also empowers developers via an open API and provides enhanced privacy and security features that are tailored to our Applications. Our customers include small businesses, state and local governments, and large, global enterprises with complex operations involving thousands of physical assets.
Our Data Platform also empowers developers via an open API and provides enhanced privacy and security features that are tailored to our Applications. Our customers range from small and medium-sized businesses to state and local governments and large, global enterprises with complex operations involving thousands of physical assets.
Building on our experience in connected fleets, our industry-agnostic architecture and culture of innovation enabled us to add new data to our Connected Operations Cloud and develop new Applications across physical operations, including: • Equipment Monitoring: Provides rich visibility and management of distributed equipment, from generators and compressors to heavy construction equipment and trailers, improving operating efficiency and preventing unplanned downtime. • Site Visibility: Provides remote visibility for IP cameras—whether provisioned by Samsara or a third party—with mobile and cloud-based software to improve site security and incident response times, and proprietary AI algorithms to power alerting and search features.
Building on our experience in connected fleets, our industry-agnostic architecture and culture of innovation enabled us to add new data to our Connected Operations Cloud and develop new Applications across physical operations, including: • Equipment Monitoring: Provides extensive visibility and management of unpowered and powered assets, ranging from generators and compressors to heavy construction equipment and trailers, to improve operating efficiency and prevent unplanned downtime. • Site Visibility: Provides remote visibility for IP cameras—whether provisioned by Samsara or a third party—with mobile and cloud-based software to improve site security and incident response times, and proprietary AI algorithms to power alerting and search features.
Our differentiated, purpose-built suite of solutions enables organizations to embrace and deploy a digital, cloud-connected strategy across their operations. With Samsara, customers have the ability to drive safer operations, increase business efficiency, and achieve their sustainability goals, all to improve the lives of their employees and the customers they serve.
Our differentiated, purpose-built suite of solutions enables organizations to embrace and deploy a digital, cloud-connected strategy across their operations. With Samsara, customers have the ability to drive safer operations, increase business efficiency, and achieve their sustainability goals, all to improve the lives of their employees and the customers they serve. We provide an end-to-end solution for operations.
Easy-to-use, customizable, and actionable reporting and alerts give customers real-time visibility into operational performance so they can proactively avoid service or work disruptions. • Maintenance. Our maintenance suite proactively spots and alerts customers of equipment issues in real-time so that they can reduce equipment downtime and lower costs.
Easy-to-use, customizable, and actionable reporting and alerts give customers real-time visibility into operational performance so they can proactively avoid service or work disruptions. 12 Table of Contents • Maintenance. Our maintenance suite proactively spots and alerts customers of equipment issues in real-time so that they can reduce fleet downtime and lower costs. • Fuel Management.
Our customers also benefit from efficiency improvements stemming from automating workflows and digitizing documentation for regulatory compliance purposes. • Enhances Sustainability. Our solution allows our customers to reduce their environmental footprint, an increasing focus for businesses around the world.
Our customers also benefit from efficiency improvements by automating workflows and digitizing documentation for regulatory compliance purposes. • Enhances Sustainability. Our solution allows our customers to reduce their environmental footprint, an area of focus for businesses around the world.
This agility and capacity are enabled by our proprietary Data Platform, which allows our Connected Operations Cloud to ingest, stream and analyze massive datasets in real-time. Our Data Platform now processes and stores trillions of event points per year in a highly performant manner through the use of our proprietary database architecture.
This agility and capacity are enabled by our proprietary Data Platform, which allows our Connected Operations Cloud to ingest, stream and analyze massive datasets in real-time. Our Data Platform now processes trillions of event points per year in a highly performant manner.
Enhanced search features streamline incident investigation by enabling customers to search long video segments for key visual indicators, like the presence of a worker wearing personal protective equipment (PPE) such as an orange vest. • Proactive Alerts. SMS, email, and voice alarms powered by our diagnostic analytics help customers quickly deploy the right response to an incident.
Enhanced search features streamline incident investigation by enabling customers to search long video segments for key visual indicators, like the presence of a worker wearing personal protective equipment such as an orange vest. • Proactive Alerts. SMS and email alerts help customers quickly deploy the right response to an incident.
The information disclosed by the foregoing channels could be deemed to be material information. As such, we encourage investors, the media, and others to follow the channels listed above and to review the information disclosed through such channels.
The information disclosed by the foregoing channels could be deemed to be material information. As such, we encourage investors, the media, and others to follow the channels listed above and to review the information disclosed through such channels. 18 Table of Contents
For example, we streamline our customers’ processes to meet Electronic Logging Device (ELD) mandates, Hours of Service (HOS) rules, and Driver Vehicle Inspection Report (DVIR) requirements. Additionally, we enable enhanced compliance with Occupational Safety and Health Administration (OSHA) requirements on operations sites.
For example, we streamline our customers’ processes to meet Electronic Logging Device (“ELD”) mandates, Hours of Service (“HOS”) rules, and Driver Vehicle Inspection Report requirements. Additionally, we enable enhanced compliance with Occupational Safety and Health Administration requirements on operations sites.
With Samsara, organizations have a central operating system of data, no longer have to manage many disparate software and hardware systems and have extensive visibility into their assets through prioritization and benchmarking capabilities. 11 Table of Contents • Improves Safety and Reduces Costs.
With Samsara, organizations have a central system of record, no longer have to manage many disparate software and hardware systems, and have extensive visibility into their assets through prioritization and benchmarking capabilities. • Improves Safety and Reduces Costs.
We engage independent entities to conduct platform, infrastructure, and hardware-level penetration tests on at least an annual basis. We have also implemented a public bug bounty program to facilitate responsible disclosure of potential security vulnerabilities, which are identified by external researchers who are rewarded for their verified findings; any such vulnerabilities are appropriately remedied by our internal security team.
We engage independent entities to conduct platform, infrastructure, and hardware-level penetration tests on at least an annual basis. We have also implemented a public bug bounty program to facilitate responsible disclosure of potential security vulnerabilities, which are identified by external researchers who are rewarded for their verified findings; our internal security team then works on addressing these vulnerabilities as appropriate.
As of January 29, 2022, over 70% of our Core Customers and 90% of our customers representing over $100,000 in ARR subscribe to multiple applications. We see a significant opportunity to expand Application adoption, increase the number of physical assets integrated with our Connected Operations Cloud, and expand across our customers’ sites and divisions.
As of January 28, 2023, over 70% of our Core Customers and over 90% of our customers representing over $100,000 in ARR subscribed to multiple applications. We see a significant opportunity to expand Application adoption, increase the number of physical assets integrated with our Connected Operations Cloud, and expand across our customers’ operations.
Our field sales team takes an account-based approach to target large multinational corporations, while our inside sales team focuses on large, medium-sized businesses, and small businesses using both inbound and outbound sales techniques. Both teams are supported by a close partnership with our marketing team’s lead generation engine.
Our enterprise sales team takes an account-based approach to target large multinational corporations, while our mid-market and commercial sales teams focus on medium-sized businesses and small businesses using both inbound and outbound sales techniques. Both teams are supported by a close partnership with our marketing team’s lead generation engine.
We generally use off-the-shelf components and outsource the manufacturing of our IoT devices to joint design manufacturers, most of whom produce our devices in their facilities in Taiwan. We believe that using outsourced manufacturing enables greater scale and flexibility at lower costs than establishing our own manufacturing facilities.
We generally use off-the-shelf components and outsource the manufacturing of our IoT devices to joint design manufacturers, most of whom produce our devices in their facilities in Taiwan, with secondary locations such as Vietnam, the Philippines, Malaysia, and Thailand. We believe that using outsourced manufacturing enables greater scale and flexibility at lower costs than establishing our own manufacturing facilities.
We offer EU Standard Contractual Clauses for the purpose of helping enable our customers’ continued compliance with the changing regulatory landscape in connection with transferring personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, highlighting a commitment to protect personal information in accordance with a set of privacy principles that offer meaningful privacy protections and recourse for EU individuals.
We offer and include the latest EU Standard Contractual Clauses (“SCCs”) and supporting UK International Data Transfer Addendum in our contractual terms with customers for the purpose of helping enable our customers’ continued compliance with the changing regulatory landscape in connection with transferring personal data subject to the GDPR and UKDPA to third countries that have not been found to provide adequate protection to such personal data, including the United States, highlighting a commitment to protect personal information in accordance with a set of privacy principles that offer meaningful privacy protections and recourse for European-based individuals.
By combining dashcam footage with speeding and accelerometer data, customers can reconstruct incidents and exonerate drivers in not-at-fault situations and can reduce costs by refuting fraudulent claims. Customers can live-stream video to conduct “virtual ride-alongs,” enabling hands-on real-time coaching from anywhere.
By combining dashcam footage with speeding and accelerometer data, customers can reconstruct incidents, exonerate drivers in not-at-fault situations, reduce costs by refuting fraudulent claims, and lower insurance premiums by improving fleet safety. Customers can live-stream video to conduct “virtual ride-alongs,” enabling hands-on real-time coaching from anywhere. • AI-Based Computer Vision.
And we believe there is still significant room for growth. 1 ARR is calculated as the annualized value of subscription contracts that have commenced revenue recognition as of the end of the reporting period. 8 Table of Contents Unlike retail, advertising, media, and information technology, which have already undergone digital transformation, industries with physical operations are still in the early stages of digital adoption.
As of January 28, 2023, we had 1,237 customers representing over $100,000 in ARR, and we believe there is still significant room for growth. 1 ARR is calculated as the annualized value of subscription contracts that have commenced revenue recognition as of the end of the reporting period. 6 Table of Contents Unlike retail, advertising, media, and information technology, which have already undergone digital transformation, industries with physical operations are still in the early stages of digital adoption.
These expansion Applications were driven by feedback from our customers who wanted to leverage our solution more broadly across their operations. Benefits of Our Solution Our solution provides the following benefits to our customers: • Captures and Connects IoT Data. Our solution captures, connects, and aggregates data into our cloud-based Data Platform.
Feedback from our customers – who wanted to leverage our solution more broadly across their operations – drove our investment into these expansion Applications. 8 Table of Contents Benefits of Our Solution Our solution provides the following benefits to our customers: • Captures and Connects IoT Data. Our solution captures, connects, and aggregates data into our cloud-based Data Platform.
Our Connected Operations Cloud is designed to deliver a robust and ready-to-use security infrastructure to our customers, who can leverage our security features without needing to have any security expertise.
Our Connected Operations Cloud is designed to deliver a robust and ready-to-use security infrastructure to our customers, who can leverage our features to enhance their own security programs without needing to have deep security expertise.
Our Data Platform’s ability to generate insights from trillions of IoT data points requires deep knowledge of operations use cases and data. For example, our Data Platform can correlate harsh braking data with video safety data to determine a safe or unsafe braking event.
Our cloud-native Data Platform was specifically developed to empower businesses to improve their operations. Our Data Platform’s ability to generate insights from trillions of IoT data points requires deep knowledge of operations use cases and data. For example, our Data Platform can correlate harsh braking data with video safety data to determine a safe or unsafe braking event.
Our customers can also customize and control privacy features to meet requirements under laws and regulations such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). What Sets Us Apart • IoT Data Leader.
Our customers can also customize and control privacy features to meet requirements under laws and regulations such as the European Union (“EU”) General Data Protection Regulation (“GDPR”), UK Data Protection Act (“UKDPA”), and the California Consumer Privacy Act (“CCPA”). What Sets Us Apart • IoT Data Leader.
This system allows for quick, behind-the-scenes querying of data at full granularity, and presents it to the user in real-time. Given the scale of our datasets, we are able to drive better, more actionable insights into our customers’ physical operations. Artificial Intelligence Our approach to AI is grounded in rapid innovation based on customer feedback.
This system allows for quick, behind-the-scenes querying of data at full granularity, and presents it to the user in real-time. Given the scale of our datasets, we are able to drive better, more actionable insights into our customers’ physical operations.
Over time, we plan to explore product opportunities in new use cases, such as IoT developer platforms, manufacturing, agriculture, and smart cities. 14 Table of Contents • Expand Our Partnerships and Integrations. Our Connected Operations Cloud is broadly applicable across verticals, and we provide customizability with over 155 partner integrations used by more than 7,000 customers, including numerous OEM partnerships.
Over time, we plan to explore product opportunities in new use cases, such as IoT developer platforms, manufacturing, agriculture, and smart cities. • Expand Our Partnerships and Integrations. Our Connected Operations Cloud is broadly applicable across verticals, and we provide customizability with over 220 partner integrations, including numerous OEM partnerships.
Sustainability We are also focused on carbon neutrality and have set ambitious sustainability goals for our own business. We believe we have achieved carbon neutrality for fiscal year 2022 by assessing our carbon footprint, including our scope 1, 2, and 3 emissions, including emissions from our final stage hardware suppliers and key service providers, and investing in carbon offset projects.
We believe we have achieved carbon neutrality for fiscal year 2023 by assessing our carbon footprint, including our scope 1, 2, and 3 emissions, including emissions from our final stage hardware suppliers and key service providers, and investing in carbon offset projects.
For compliance or ELD-focused Applications, we compete primarily with vendors like Omnitracs. Equipment Monitoring Our equipment monitoring Applications compete with a wide range of vendors depending on the complexity of the equipment tracked. Our primary competitors for monitoring equipment and trailers are vendors focusing on equipment location tracking and diagnostics like Orbcomm and ZTR.
Equipment Monitoring Our equipment monitoring Applications compete with a wide range of vendors depending on the complexity of the equipment tracked. Our primary competitors for monitoring equipment and trailers are vendors focusing on equipment location tracking and diagnostics like Orbcomm and ZTR. For more advanced monitoring and control solutions, we primarily compete against homegrown internal or DIY solutions.
Our Connected Operations Cloud is fully integrated to securely access and manage multiple Applications for physical operations. Our Data Platform is deployed across a wide variety of industry verticals and integrated with third-party applications such as enterprise resource planning, payroll, and human capital management applications, extending the impact of IoT data to customers’ existing applications.
Our Data Platform is deployed across a wide variety of industry verticals and integrated with third-party applications such as enterprise resource planning, payroll, and human capital management applications, extending the impact of IoT data to customers’ existing applications. Our Connected Operations Cloud was also built with data security and privacy in mind.
Overall, we are committed to complying with, and helping our customers comply with, applicable regulations and requirements, and we will continue to devote significant internal resources to these efforts.
Guiding our actions is a commitment to complying with, and helping our customers comply with, applicable regulations and requirements, and we will continue to devote significant internal resources to these efforts.
They also receive video-based coaching and safety scorecards. • Vehicle Telematics: Provides a robust, real-time telematics solution with GPS tracking, routing and dispatch, fuel efficiency management, electric vehicle usage and charge planning, preventative maintenance, and diagnostics capabilities to efficiently manage vehicle fleets in a sustainable way. • Apps and Driver Workflows: Improves driver productivity and enables regulatory compliance, as drivers see upcoming jobs, capture electronic documents, perform maintenance inspections, maintain compliance logs, and message with back-office administration.
Key functionality includes: detecting high-risk behaviors and incidents for real-time coaching alerts, preserving video records to exonerate drivers and dispute fraudulent damage claims, and providing software coaching workflows to analyze and improve driver safety. • Vehicle Telematics: Provides a robust, real-time telematics solution with GPS tracking, routing and dispatch, fuel efficiency management, electric vehicle usage and charge planning, preventative maintenance, and diagnostics capabilities to efficiently manage vehicle fleets in a sustainable way. • Apps and Driver Workflows: Improves driver productivity and enables regulatory compliance, as drivers see upcoming jobs, capture electronic documents, perform maintenance inspections, maintain compliance logs, and message with back-office administration.
For more advanced monitoring and control solutions we primarily compete against homegrown internal or DIY solutions. Site Visibility Our site visibility Applications primarily compete with security, surveillance and access control vendors like Avigilon, a Motorola Solutions company, who specialize in video analytics, AI, and network video management software.
Site Visibility Our site visibility Applications primarily compete with security, surveillance, and access control vendors like Avigilon (a Motorola Solutions company) that specialize in video analytics, AI, and network video management software.
Importantly, we incorporate customer feedback collected through a feedback submission form on our customer dashboard as well as across our internal teams. Our product team also works directly with existing and prospective customers to incorporate direct feedback into our development process.
We have a culture of innovation, which is evidenced by our release of new features throughout last fiscal year. Importantly, we incorporate feedback collected through a feedback submission form on our customer dashboard as well as across our internal teams. Our product team also works directly with existing and prospective customers to incorporate direct feedback into our development process.
We also have partnerships with OEMs who build connectivity into their products, such as vehicles and heavy equipment. These partnerships enable us to capture IoT data into our Connected Operations Cloud without requiring customers to install aftermarket IoT devices. This lowers the barrier to connecting data to our platform. Our partner ecosystem also encompasses a number of commercial partnerships.
These partnerships enable us to capture IoT data into our Connected Operations Cloud without requiring customers to install aftermarket IoT devices. This lowers the barrier to connecting data to our platform. Our partner ecosystem also encompasses a number of commercial partnerships.
Carbon offset projects that we have recently invested in include biomass carbon sequestration, the safe destruction of old refrigerant stockpiles that would otherwise leak into the atmosphere, and the replacement of contaminated transformer oil used in electric grid equipment.
Carbon offset projects that we have invested in include biomass carbon sequestration, the safe destruction of old refrigerant stockpiles that would otherwise leak into the atmosphere, and the replacement of contaminated transformer oil used in electric grid equipment. Growth Strategies We intend to pursue the following growth strategies: • Expand Our Customer Base by Acquiring New Customers.
By detecting risky behaviors like distracted driving or tailgating, our system can alert drivers using real-time, in-cab audio alerts, and video is captured in the cloud for personalized driver coaching. • Scoring and Reporting.
Our safety system leverages proprietary AI, embedded at the edge in IoT dash cameras, to detect safety events in real-time. By detecting risky behaviors like distracted driving or tailgating, our system can coach drivers using real-time, in-cab audio alerts, and video is captured in the cloud for personalized driver coaching. • Scoring and Reporting.
We also maintain a self-certification under the EU-U.S. and Swiss-U.S. Privacy Shield programs. We hold our service providers and sub processors to the same high data protection and privacy standards to which we hold ourselves, including through contractual commitments and periodic reviews and audits.
We hold our service providers and sub processors to the same high data protection and privacy standards to which we hold ourselves, including through contractual commitments and periodic reviews and audits.
Item 1. Business Overview Samsara is on a mission to increase the safety, efficiency and sustainability of the operations that power the global economy. To realize this vision, we pioneered the Connected Operations Cloud, which allows businesses that depend on physical operations to harness Internet of Things (“IoT”) data to develop actionable business insights and improve their operations.
To realize this vision, we pioneered the Connected Operations Cloud, which is a system of record that enables businesses that depend on physical operations to harness Internet of Things (“IoT”) data to develop actionable business insights and improve their operations.
We use this input to update the privacy and security features of our Connected Operations Cloud, develop new features and Applications, and give our customers the tools they need to meet their privacy goals.
Our teams conduct privacy impact assessments, monitor guidance from industry and privacy experts, and interpret privacy legislation from relevant regulatory bodies. We use this input to update the privacy and security features of our Connected Operations Cloud, develop new features and Applications, and give our customers the tools they need to meet their privacy goals.
For our fiscal years ended January 29, 2022 and January 30, 2021, our revenue was $428.3 million and $249.9 million, respectively, representing year-over-year growth of 71%. Our net loss was $355.0 million and $210.2 million for our fiscal years ended January 29, 2022 and January 30, 2021, respectively.
For our fiscal years ended January 28, 2023 and January 29, 2022, our revenue was $652.5 million and $428.3 million, respectively, representing year-over-year growth of 52%. Our net loss was $247.4 million and $355.0 million for our fiscal years ended January 28, 2023 and January 29, 2022, respectively.
This robust ecosystem of third-party integrations, alongside sensor data, drives improved efficiency and insight for customers by unifying and analyzing data across multiple, previously siloed systems.
App Marketplace and APIs Samsara’s integration ecosystem includes over 220 pre-built integrations in our App Marketplace. This robust ecosystem of third-party integrations drives improved efficiency and insight for customers by unifying and analyzing data across multiple, previously siloed systems.
As of January 29, 2022, we had over 14,000 Core Customers, who are customers with subscriptions to our Connected Operations Cloud representing over $5,000 in annual recurring revenue (“ARR”) 1 .
As of January 28, 2023, we had over 19,000 Core Customers, who are customers with subscriptions to our Connected Operations Cloud representing over $5,000 in annual recurring revenue (“ARR”). 1 While our Connected Operations Cloud is accessible to customers of all sizes, we are particularly focused on larger customers representing over $100,000 in ARR.
In May 2018, we established our first international office in London. We continued to expand our international footprint in fiscal year 2022 by opening new offices in Mexico and the Benelux region. In fiscal year 2022, we generated approximately 10% of our total revenue from outside the United States.
In May 2018, we established our first international office in England. We continued to expand internationally in fiscal year 2023, and our international footprint now spans across the United States, Canada, Mexico, Taiwan, England, France, Germany, Poland, and the Benelux region. In fiscal year 2023, we generated approximately 11% of our total revenue from outside the United States.
We also had 55 patent applications pending for examination in the United States and no non-U.S. patents or patent applications. Despite our pending U.S. patent applications, there can be no assurance that our patent applications will result in issued patents.
Despite our pending U.S. patent applications, there can be no assurance that our patent applications will result in issued patents.
We believe that the quantity and diversity of IoT data types on our Connected Operations Cloud, together with the analytic insights that we provide our customers, differentiate us in the market. In fiscal year 2022, our Data Platform processed over 85 billion minutes of video footage and collected about 4.6 trillion data points.
We believe that the quantity and diversity of IoT data types on our Connected Operations Cloud, together with the analytic insights that we provide our customers, differentiate us in the market. In fiscal year 2023, our Data Platform collected approximately six trillion data points. This immense amount of data enables us to continuously enhance our AI models.
While the portion of our business focused on fleets has significantly expanded over the years, we believe we are still in the very early stages of this large and expansive opportunity.
While the portion of our business focused on fleets has significantly expanded over the years, we believe we are still in the very early stages of this large and expansive opportunity. Our core Applications for connected fleets include: • Video-Based Safety: Enables customers to build a safety program and protect their teams with AI-enabled video.
Our integrated platform brings together data from across an organization’s physical operations including fleets, equipment, and sites to give customers a digital, actionable view of their physical operations in one place. This single pane of glass is designed to deliver comprehensive insight into a customer’s end-to-end physical operations. • Extensible Technology Platform.
As we aggregate and analyze more data, the benefits of our Connected Operations Cloud increase. • Single Integrated Platform. Our integrated platform brings together data from across an organization’s physical operations, including fleets, equipment, and sites, to give customers a digital, actionable view of their physical operations in one place.
Our Connected Operations Cloud was also built with data security and privacy in mind. It provides non-technical customers state-of-the-art security and privacy tooling that is easy to adopt and tailored for the specific Applications they depend on.
It provides non-technical customers advanced security and privacy tooling that is easy to adopt and tailored for the specific Applications they depend on. The integrated nature of our Connected Operations Cloud offers a differentiated IoT data solution, even to those of our customers who are not data experts. • Purpose-Built for Physical Operations.
We also are subject to other laws and regulations governing issues such as privacy, data security, telecommunications, the use of biometric data, labor and employment, anti-discrimination, whistleblowing and worker confidentiality obligations, product liability, consumer protection and warnings, marketing, taxation, competition, arbitration agreements and class action waiver provisions, and terms of service, among other issues.
Similarly, on January 1, 2023, Canada began enforcement of its ELD technical standard, mandating that motor carriers and drivers subject to HOS requirements in Canada use ELDs that have been tested and certified by an accredited, third-party certification body. 17 Table of Contents We also are subject to other laws and regulations governing issues such as privacy, data security, telecommunications, the use of biometric data, labor and employment, anti-discrimination, exports, anti-bribery, whistleblowing and worker confidentiality obligations, product liability, consumer protection and warnings, marketing, taxation, securities, competition, arbitration agreements and class action waiver provisions, and terms of service, among other issues.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we have elected to take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” These provisions include, but are not limited to: being permitted to have only two years of audited financial statements and only two years of related selected financial data and management’s discussion and analysis of financial condition, and results of operations disclosures; being exempt from compliance with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act; being exempt from any rules that could be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor’s report on financial statements; being subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and not being required to hold nonbinding advisory votes on executive compensation or on any golden parachute payments not previously approved.
Biggest changeAs a result, we are now subject to various disclosure and compliance requirements that did not previously apply to us, such as: • the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act; • the requirement that we adopt new or revised accounting standards when they are applicable to public companies, instead of delaying their adoption until they are applicable to private companies; • compliance with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding obligatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and financial statements; • the requirement that we provide full and more detailed disclosures regarding executive compensation; and • the requirement that we hold a non-binding advisory vote on executive compensation and obtain stockholder approval of any golden parachute payments not previously approved.
The following material factors, among others not currently known by us or that we currently do not believe are material, could cause our actual results to differ materially from historical results and those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors, and oral and other statements.
The following factors, among others not currently known by us or that we currently do not believe are material, could cause our actual results to differ materially from historical results and those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors, and oral and other statements.
However, we cannot assure you that these security measures and disaster response plans will be adequate or effective against all security threats, including those from malicious insiders, ransomware and other malware, denial of service and other attacks, and natural disasters and other sources of disruptions to the operation of our Connected Operations Cloud or our or our third-party partners’ other operations, including power outages and telecommunications and other failures.
However, we cannot assure you that these security measures and disaster response plans will be adequate or effective against all security threats, including those from malicious insiders, ransomware and other malware, denial of service and other attacks, and natural disasters and other sources of disruptions to the operation of our Connected Operations Cloud or our or our third-party partners’ operations, including power outages and telecommunications and other failures.
Our failure to effectively provide training and implementation services to our customers could result in lost opportunities for follow-on sales to these customers and decreased subscriptions by new customers, which would adversely affect our business and growth prospects.
Failure to effectively provide training and implementation services to our customers could result in lost opportunities for follow-on sales to these customers and decreased subscriptions by new customers, which would adversely affect our business and growth prospects.
We also rely upon third-party, non-employee contractors to perform certain development services on our behalf, and we cannot be certain that such contractors will comply with our review processes or not incorporate software code made available under open source licenses into our proprietary code base.
We also rely upon third-party, non-employee contractors to perform certain development services on our behalf, and we cannot be certain that such contractors will comply with our review processes or not incorporate software code made available under certain open source licenses into our proprietary code base.
We receive, collect, store, process, transfer, and use personal information and other data relating to users of our solution, our employees and contractors, and other persons. For example, one of our Applications collects video information of the worksites of our customers, and certain of our Applications collect and store facial recognition data, which is subject to heightened sensitivity and regulation.
We receive, collect, store, process, transfer, and use personal information and other data relating to users of our solution, our employees and contractors, and other persons. For example, one of our Applications collects video of the worksites of our customers, and certain of our Applications collect and store facial recognition data, which is subject to heightened sensitivity and regulation.
The tax authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements or our revenue recognition policies, which could increase our worldwide effective tax rate and harm our financial position and results of operations.
The tax authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology, intercompany arrangements, or our revenue recognition policies, which could increase our worldwide effective tax rate and harm our financial position and results of operations.
In the event of a natural disaster, including a major earthquake, blizzard, or hurricane, or a catastrophic event such as a fire, power loss, or telecommunications failure, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in development of our solution, lengthy interruptions in service, breaches of data security, and loss of critical data, all of which could have an adverse effect on our future results of operations.
In the event of a natural disaster, including a major earthquake, blizzard, flood, or hurricane, or a catastrophic event such as a fire, power loss, or telecommunications failure, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in development of our solution, lengthy interruptions in service, breaches of data security, and loss of critical data, all of which could have an adverse effect on our future results of operations.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibit a person who owns 15% or more of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibit a person who owns 15% or more of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired 15% or more of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Our business is subject to regulation by various federal, state, local, and foreign governmental agencies, including agencies responsible for monitoring and enforcing compliance with various legal obligations, covering topics including privacy and data protection, telecommunications, intellectual property, employment and labor, workplace safety, the environment, consumer protection, governmental trade sanctions, import and export controls, anti-corruption and anti-bribery, securities, and tax.
Our business is subject to regulation by various federal, state, local, and foreign governmental agencies, including agencies responsible for monitoring and enforcing compliance with various legal obligations, covering topics including privacy and data protection, telecommunications, intellectual property, employment and labor, workplace safety, the environment, consumer protection, governmental trade sanctions, import and export controls, anti-corruption and anti-bribery, securities, competition, and tax.
Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, stockholders, officers, or other employees to us or our stockholders, (c) any action arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws, or (d) any action or proceeding asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court in Delaware or the federal district court for the District of Delaware) and any appellate court therefrom, in all cases subject to the court having jurisdiction over the claims at issue and the indispensable parties; provided that the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act.
Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, stockholders, officers, or other employees to us or our stockholders, (c) any action arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws, or (d) any action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court in Delaware or the federal district court for the District of Delaware), in all cases subject to the court having jurisdiction over the claims at issue and the indispensable parties; provided that the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act.
If we do not succeed in helping our customers quickly resolve post-deployment issues or provide effective ongoing support and education on our Connected Operations Cloud, our ability to sell additional subscriptions to, or renew subscriptions with, existing customers or expand the value of existing customers’ subscriptions would be adversely affected and our reputation with potential customers could be damaged.
If we do not succeed in helping our customers quickly resolve post-deployment issues or provide effective ongoing support and education on our Connected Operations Cloud, our ability to sell additional subscriptions to, or renew subscriptions with, existing customers or expand the value of existing customers’ subscriptions would be adversely affected and our reputation with our customers could be damaged.
When required to correct device bugs or to implement proactive firmware updates to our IoT devices, we have implemented over-the-air firmware updates to devices that are deployed in the field. If such updates do not perform as anticipated, they may prolong interruptions and performance problems and otherwise impact our reputation and relationship with our customers.
When required to correct device bugs or to implement proactive firmware updates to our IoT devices, we have often implemented over-the-air firmware updates to devices that are deployed in the field. If such updates do not perform as anticipated, they may prolong interruptions and performance problems and otherwise impact our reputation and relationship with our customers.
In addition, if we acquire or license technologies from third parties, we may be exposed to increased risk of being the subject of intellectual property infringement due to, among other things, our lower level of visibility into the development process with respect to such technology and the care taken to safeguard against infringement risks.
In addition, if we acquire or license technologies from third parties, we may be exposed to increased risk of being the subject of intellectual property infringement claims due to, among other things, our lower level of visibility into the development process with respect to such technology and the care taken to safeguard against infringement risks.
These and other possible disagreements could lead to delays in the collaborative research, development or commercialization of our systems, or could require or result in costly and time-consuming litigation that may not be decided in our favor. Any such event could materially and adversely affect our financial condition and results of operations.
These and other possible disagreements could lead to delays in the research, development or commercialization of our systems, or could require or result in costly and time-consuming litigation that may not be decided in our favor. Any such event could materially and adversely affect our financial condition and results of operations.
If we are not able to develop and timely introduce new Applications and features for our Connected Operations Cloud that achieve market acceptance, keep pace with technological developments, and meet emerging regulatory requirements, our business, financial condition, and results of operations would be harmed.
If we are not able to develop and timely introduce new Applications and features for our Connected Operations Cloud that achieve market acceptance, keep pace with technological developments, and meet existing and emerging regulatory requirements, our business, financial condition, and results of operations would be harmed.
Our recent and historical growth should not be considered indicative of our future performance. Even if our revenue continues to increase over the long term, we expect that our revenue growth rate will decline in the future as a result of a variety of factors, including the maturation of our business.
Our recent and historical growth should not be considered indicative of our future performance. Even if our revenue continues to increase over the long term, we expect that our revenue growth rate will continue to decline in the future as a result of a variety of factors, including the maturation of our business.
Our success is tied to our ability to protect our proprietary technology, methodologies, know-how, and branding. We rely on a combination of trademarks, copyrights, patents, trade secrets and other intellectual property laws, contractual restrictions, and technical organizational security and confidentiality procedures to establish and protect our proprietary rights.
Our success is tied to our ability to identify and protect our proprietary technology, methodologies, know-how, and branding. We rely on a combination of trademarks, copyrights, patents, trade secrets and other intellectual property laws, contractual restrictions, and technical organizational security and confidentiality procedures to establish and protect our proprietary rights.
It may be the case that one or more of those third parties fail to adhere to our policies or violate applicable federal, state, local, and international laws, including but not limited to, those related to corruption, bribery, economic sanctions, and export/import controls.
It may be the case that one or more of those third parties fail to adhere to our policies or violate applicable federal, state, local, and international laws, including but not limited to, those related to taxation, corruption, bribery, economic sanctions, and export/import controls.
If we fail to meet these contractual commitments, we could be obligated to provide credits for future service or face subscription termination with refunds of prepaid amounts, which would lower our revenue and harm our business, financial condition, and results of operations.
If we fail to meet these contractual commitments, we could be obligated to provide credits for future service or face subscription termination with refunds of prepaid amounts, which would lower our revenue and harm our reputation, business, financial condition, and results of operations.
These risks will increase as we continue to grow the scale and functionality of our Connected Operations Cloud and as we process, store, and transmit increasingly large amounts of information and data, which may include proprietary, sensitive or confidential data or personal or identifying information.
These risks will increase as we continue to grow the scale and functionality of our Connected Operations Cloud and as we store, transmit, and otherwise process increasingly large amounts of information and data, which may include proprietary, sensitive or confidential data or personal or identifying information.
Further, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities, which may increase our costs and risks. 44 Table of Contents Failure to comply with anti-corruption and anti-money laundering laws, including the FCPA and similar laws associated with our activities outside of the United States, could subject us to penalties and other adverse consequences.
Further, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities, which may increase our costs and risks. 41 Table of Contents Failure to comply with anti-corruption and anti-money laundering laws, including the FCPA and similar laws associated with our activities outside of the United States, could subject us to penalties and other adverse consequences.
If we fail to protect our intellectual property rights adequately, our competitors or other third parties may gain access to our proprietary technology and our business may be harmed. In addition, defending our intellectual property rights might entail significant resources and expenses.
If we fail to identify and protect our intellectual property rights adequately, our competitors or other third parties may gain access to our proprietary technology and our business may be harmed. In addition, defending our intellectual property rights might entail significant resources and expenses.
We have also experienced significant growth in the number of customers, IoT devices and connected assets, and data supported by our solution and our associated infrastructure, which has placed additional demands on our resources and operations.
We have also experienced significant growth in the number of customers, IoT devices and connected assets, and data supported by our solution and our associated infrastructure, which has placed additional demands on our resources, systems, and operations.
We expect competition to increase as other established and emerging companies, such as Netradyne, Platform Science, and Verkada, enter the markets in which we compete, as customer requirements evolve and as new products and services and technologies are introduced.
We expect competition to increase as other established and emerging companies, such as Motive, Netradyne, Platform Science, and Verkada, enter the markets in which we compete, as customer requirements evolve and as new products and services and technologies are introduced.
Perceived uncertainties as to our future direction as a result of shareholder activism may lead to the perception of a change in the direction of the business or other instability and may affect our relationships with our end-customers, prospective and current employees and others. 58 Table of Contents Our amended and restated bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees.
Perceived uncertainties as to our future direction as a result of shareholder activism may lead to the perception of a change in the direction of the business or other instability and may affect our relationships with our end-customers, prospective and current employees and others. 55 Table of Contents Our amended and restated bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees.
In addition, we may not achieve anticipated revenue growth from expanding our sales force if we are unable to hire, develop, integrate, and retain talented and effective sales personnel, if our new and existing sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales programs are not effective. 25 Table of Contents In order to increase our revenue, we expect we will need to further build our direct sales capacity while also developing channel partners who will also require training, support, and integration into our sales process.
In addition, we may not achieve anticipated revenue growth from expanding our sales force if we are unable to hire, develop, integrate, and retain talented and effective sales personnel, if our new and existing sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales programs are not effective. 21 Table of Contents In order to increase our revenue, we expect we will need to further build our direct sales capacity while also developing channel partners who will also require training, support, and integration into our sales process.
Our quarterly results of operations and business metrics may fluctuate as a result of a variety of factors, many of which are outside of our control, may be difficult to predict, and may or may not fully reflect the underlying performance of our business.
Our results of operations and business metrics may fluctuate as a result of a variety of factors, many of which are outside of our control, may be difficult to predict, and may or may not fully reflect the underlying performance of our business.
Such provisions include: • our amended and restated certificate of incorporation provides for a multi-class common stock structure, which provides our pre-IPO stockholders, which includes certain of our executive officers, employees, directors, and their affiliates, with significant influence over matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets; • our amended and restated certificate of incorporation requires approval of the holders of at least two-thirds of the outstanding shares of our Class B common stock voting as a separate class for certain corporate actions including (i) any amendment to the amended and restated certificate of incorporation that alters the voting, conversion or other rights, powers, preferences, privileges or restrictions of the Class B common stock, (ii) reclassification of Class A common stock and Class C common stock into shares having rights as to dividends or liquidation that are senior to that of the Class B common stock, (iii) an increase to the voting power of the Class A common stock or Class C common stock, (iv) issuance of shares of any class or series of capital stock (other than Class B common stock) having more than one vote per share, and (v) issuance of additional shares of Class B common stock, with certain exceptions; • our amended and restated certificate of incorporation and amended and restated bylaws authorize only our board of directors to fill vacant directorships, including newly created seats, and the number of directors constituting our board of directors will be permitted to be set only by a resolution adopted by a majority vote of our entire board of directors; • until the first date on which the outstanding shares of our Class B common stock represent less than a majority of the total voting power of the then outstanding shares entitled to vote generally in the election of directors, or the Voting Threshold Date, our stockholders will be able to take action by written consent if such action is first recommended or approved by our board of directors; • a special meeting of our stockholders may only be called by the chairperson of our board of directors, our Chief Executive Officer, or a majority of our board of directors; • our amended and restated certificate of incorporation does not provide for cumulative voting; • certain litigation against us can only be brought in Delaware; • our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
Such provisions include: • our amended and restated certificate of incorporation provides for a multi-class common stock structure, which provides our pre-IPO stockholders, which includes certain of our executive officers, employees, directors, and their affiliates, with significant influence over matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets; • our amended and restated certificate of incorporation requires approval of the holders of at least two-thirds of the outstanding shares of our Class B common stock voting as a separate class for certain corporate actions including (i) any direct or indirect amendment to the amended and restated certificate of incorporation that is inconsistent with or alters the voting, conversion or other rights, powers, preferences, privileges or restrictions of the Class B common stock, (ii) reclassification of Class A common stock or Class C common stock into shares having rights as to dividends or liquidation that are senior to that of the Class B common stock, (iii) an increase to the voting power of the Class A common stock or Class C common stock, (iv) authorization or issuance of shares of any class or series of capital stock (other than Class B common stock) having more than one vote per share, and (v) issuance of additional shares of Class B common stock, with certain exceptions; • our amended and restated certificate of incorporation and amended and restated bylaws authorize only our board of directors to fill vacant directorships, including newly created seats, and the number of directors constituting our board of directors will be permitted to be set only by a resolution adopted by a majority vote of our entire board of directors; • until the first date on which the outstanding shares of our Class B common stock represent less than a majority of the total voting power of the then outstanding shares entitled to vote generally in the election of directors, our stockholders will be able to take action by consent only if such action is first recommended or approved by our board of directors; • a special meeting of our stockholders may only be called by the chairperson of our board of directors, our Chief Executive Officer, or a majority of our entire board of directors; • our amended and restated certificate of incorporation does not provide for cumulative voting; • certain litigation against us can only be brought in Delaware; • our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
Costly and time-consuming litigation could be necessary to enforce and determine the scope of our trade secret rights and related confidentiality and nondisclosure provisions, and failure to obtain or maintain trade secret protection, or our competitors’ obtainment of our trade secrets or independent development of unpatented technology similar to ours or competing technologies, could adversely affect our competitive business position. 38 Table of Contents In order to protect our intellectual property rights and proprietary technology, we may be required to spend significant resources to monitor and protect our intellectual property rights.
Costly and time-consuming litigation could be necessary to enforce and determine the scope of our trade secret rights and related confidentiality and nondisclosure provisions, and failure to obtain or maintain trade secret protection, or our competitors’ obtainment of our trade secrets or independent development of unpatented technology similar to ours or competing technologies, could adversely affect our competitive business position. 35 Table of Contents In order to protect our intellectual property rights and proprietary technology, we may be required to spend significant resources to monitor and protect our intellectual property rights.
If we are unable to design our solutions into new technologies such as 5G and satellite communications, our business, financial condition, and results of operations could be harmed. 32 Table of Contents If we do not develop IoT devices that are compatible with third-party hardware, software and infrastructure, including the many evolving wireless industry standards, our ability to introduce and sell new subscriptions to access our Connected Operations Cloud could suffer.
If we are unable to design our solutions into new technologies such as 5G and satellite communications, our business, financial condition, and results of operations could be harmed. 28 Table of Contents If we do not develop IoT devices that are compatible with third-party hardware, software and infrastructure, including the many evolving wireless industry standards, our ability to introduce and sell new subscriptions to access our Connected Operations Cloud could suffer.
Recent litigation around these laws has encouraged plaintiffs’ attorneys to bring additional actions against other targets, and because some of our products employ technology that may be perceived as subject to these laws, we and our customers have in certain situations been, and may in the future become, subject to litigation, and we may also become subject to government enforcement actions, damages and penalties under these laws, which could adversely affect our business, results of operations and our financial condition.
Recent litigation around these laws has encouraged plaintiffs’ attorneys to bring additional actions against other targets, and because some of our products employ technology that may be perceived as subject to these laws, we and our customers have been, and may in the future become, subject to litigation, and we may also become subject to government enforcement actions, damages and penalties under these laws, which could adversely affect our business, results of operations and our financial condition.
If we are unable to compete successfully against current and future competitors, our business, financial condition, and results of operations would be harmed. 29 Table of Contents If we experience a security breach or incident affecting our customers’ assets or data, our data or IoT devices, our Data Platform, or other systems, our Connected Operations Cloud may be perceived as not being secure, our reputation may be harmed and our business could be materially and adversely affected.
If we are unable to compete successfully against current and future competitors, our business, financial condition, and results of operations would be harmed. 25 Table of Contents If we experience a security breach or incident affecting our customers’ assets or data, our data or IoT devices, our Data Platform, or other systems, our Connected Operations Cloud may be perceived as not being secure, our reputation may be harmed and our business could be materially and adversely affected.
Our agreements with customers and other third parties have in some cases included indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, misappropriation or violation, damages caused by us to property or persons, or other liabilities relating to or arising from our solution or other contractual obligations.
Our agreements with customers, channel partners and other third parties have in some cases included indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, misappropriation or violation, damages caused by us to property or persons, or other liabilities relating to or arising from our solution or other contractual obligations.
Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to the foregoing bylaw provisions.
Any person or entity purchasing, holding, or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to the foregoing bylaw provisions.
Such disruptions or failures could also include a major earthquake, blizzard, fire, cyber-attack, act of terrorism, or other catastrophic event, or a decision by one of our third-party service providers to close facilities that we use without adequate notice, or other unanticipated problems with the third-party services that we use, including a failure to meet service standards.
The causes for such disruptions or failures could also include a major earthquake, blizzard, fire, cyber-attack, act of terrorism, or other catastrophic event, or a decision by one of our third-party service providers to close facilities that we use without adequate notice, or other unanticipated problems with the third-party services that we use, including a failure to meet service standards.
Additionally, our customers might not renew for reasons entirely out of our control, such as mergers and acquisitions affecting our customer base, the dissolution of their business or business segment utilizing our solution or an economic downturn affecting their industry. A decrease in our renewal rate would have an adverse effect on our business, financial condition, and results of operations.
Additionally, our customers might not renew for reasons entirely out of our control, such as mergers and acquisitions affecting our customer base, the dissolution of their business or business unit utilizing our solution or an economic downturn affecting their industry. A decrease in our renewal rate would have an adverse effect on our business, financial condition, and results of operations.
We have received notices and been subject to litigation (and we may be subject to litigation in the future) that claims we have misappropriated, misused, or infringed other parties’ intellectual property rights, and, to the extent we gain greater market visibility, we face a higher risk of being the subject of intellectual property infringement claims, which is not uncommon with respect to the enterprise software market.
We have received notices and been subject to litigation (and we may be subject to litigation in the future) that claims we have misappropriated, misused, or infringed other parties’ intellectual property rights, and, to the extent we gain greater market visibility, we face a higher risk of being the subject of intellectual property infringement claims, which is not uncommon with respect to IoT devices and the enterprise software market.
Competition in these markets is based on several factors, including the comprehensiveness of a solution; feature set breadth and extensibility; analytical capability; ease of adoption; platform reliability, security and scalability; customer support; ability to realize cost savings; brand awareness and reputation; and the strength of sales and marketing efforts and channel partnerships.
Competition in these markets is based on several factors, including the comprehensiveness of a solution; feature set breadth and extensibility; analytical capability; ease of adoption; platform reliability, security and scalability; customer support; ability to realize cost savings and return on investment; brand awareness and reputation; and the strength of sales and marketing efforts and channel partnerships.
As the use of our solution, including features and Applications that were recently developed, continues to expand to even more sensitive, secure, or mission-critical uses by our customers, we may be subject to increased scrutiny, potential reputational risk, or potential liability should our solution fail to perform as intended in such deployments.
As the use of our solution, including features and Applications that were recently developed, continues to expand to even more sensitive, secure, or mission-critical uses by our customers, we will be subject to increased scrutiny, potential reputational risk, or potential liability should our solution fail to perform as intended in such deployments.
More generally, the COVID-19 outbreak has adversely affected economies and financial markets globally, leading to an economic downturn, which could adversely affect demand for our products, has led to some of our customers going through bankruptcy proceedings, has adversely affected our ability to collect payments from our customers and could harm our business and results of operations.
More generally, the COVID-19 pandemic has adversely affected economies and financial markets globally, leading to an economic downturn, which could adversely affect demand for our products, has led to some of our customers going through bankruptcy proceedings, has adversely affected our ability to collect payments from our customers and could harm our business and results of operations.
Certain technologies and industry developments, such as autonomous vehicles with closed software ecosystems, may negatively impact our ability to compete within certain industry segments. Even if such software ecosystems were not entirely closed to our solution, autonomous vehicles may reduce the overall demand for vehicular Applications that provide safety and compliance functionality.
Certain technologies and industry developments, such as autonomous vehicles with closed software ecosystems, may negatively impact our ability to compete within certain industries. Even if such software ecosystems were not entirely closed to our solution, autonomous vehicles may reduce the overall demand for vehicular Applications that provide safety and compliance functionality.
Any of the above could adversely affect our business, financial condition, and results of operations. 31 Table of Contents We rely on third-party software for certain essential financial and operational services, and a failure or disruption in these services could materially and adversely affect our ability to manage our business effectively.
Any of the above could adversely affect our business, financial condition, and results of operations. 27 Table of Contents We rely on third-party software for certain essential financial and operational services, and a failure or disruption in these services could materially and adversely affect our ability to manage our business effectively.
These claims could also subject us to significant liability for damages, potentially including treble damages if we are found to have willfully infringed patents or copyrights, and may require us to indemnify our customers for liabilities they incur as a result of such claims.
These claims could also subject us to significant liability for damages, potentially including treble damages if we are found to have willfully infringed patents or copyrights, and may require us to indemnify our customers and channel partners for liabilities they incur as a result of such claims.
Insurers may also deny us coverage as to any future claim. Any of these results could harm our growth prospects, financial condition, business and reputation. 30 Table of Contents Abuse or misuse of our internal platform controls and system tools could cause significant harm to our business and reputation.
Insurers may also deny us coverage as to any future claim. Any of these results could harm our growth prospects, financial condition, business and reputation. 26 Table of Contents Abuse or misuse of our internal platform controls and system tools could cause significant harm to our business and reputation.
In any of these events, we and our customers could be required to seek licenses from third parties in order to continue offering our products, to re-engineer our products, or to discontinue the sale of our products in the event re-engineering cannot be accomplished on a timely basis.
In any of these events, we, our customers, and our channel partners could be required to seek licenses from third parties in order to continue offering our products, to re-engineer our products, or to discontinue the sale of our products in the event re-engineering cannot be accomplished on a timely basis.
There can be no assurance that our patents or patent applications will be enforceable or otherwise upheld as valid. Any patents, trademarks, or other intellectual property rights that we have obtained or may obtain may be challenged by others or invalidated, circumvented, abandoned or lapse.
There can be no assurance that our patents are enforceable or otherwise will be upheld as valid, or that our patent applications will be granted. Any patents, trademarks, or other intellectual property rights that we have obtained or may obtain may be challenged by others or invalidated, circumvented, abandoned or lapse.
We and our customers may also be subject to suits by parties claiming infringement, misappropriation or violation due to the reliance by our solutions on certain open source software, and such litigation could be costly for us to defend or subject us to an injunction.
We, our customers, and our channel partners may also be subject to suits by parties claiming infringement, misappropriation or violation due to the reliance by our solutions on certain open source software, and such litigation could be costly for us to defend or subject us to an injunction.
General business and economic conditions that could affect us and our customers include fluctuations in economic growth, debt and equity capital markets, liquidity of the global financial markets, the availability and cost of credit, investor and consumer confidence, and the strength of the economies in which we and our customers operate.
General business and economic conditions that could affect us and our customers include fluctuations in economic growth, debt and equity capital markets, liquidity of the global financial markets, foreign currency fluctuations, the availability and cost of credit, investor and consumer confidence, and the strength of the economies in which we and our customers operate.
However, our customers have no obligation to renew their subscriptions after the initial terms expire, and our customers might not renew their subscriptions for a similar contract period, with the same or greater number of Applications and IoT devices, or at all.
However, our customers have no obligation to renew their subscriptions after the initial terms expire, and our customers might not renew their subscriptions for a similar contract period, on the same payment terms, with the same or greater number of Applications and IoT devices, or at all.
As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act), the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of the New York Stock Exchange and other applicable securities rules and regulations.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of the New York Stock Exchange and other applicable securities rules and regulations.
If we ultimately determine that we have excess supply, we may have to record a reserve for excess manufacturing costs or reduce our prices and write-down inventory, either of which in turn could result in lower gross margins.
If we ultimately determine that we have excess and obsolete supply, we may have to record a reserve for excess manufacturing costs or reduce our prices and write-down inventory, either of which in turn could result in lower margins.
Further, the United Kingdom ceased to be a European Union Member State on January 31, 2020, but enacted legislation that substantially implements the GDPR and which provides for substantial penalties in a manner similar to the GDPR (up to the greater of £17.5 million and 4% of our global annual turnover for the preceding financial year for the most serious violations).
Further, the United Kingdom ceased to be a EU member state on January 31, 2020, but enacted legislation that substantially implements the GDPR and which provides for substantial penalties in a manner similar to the GDPR (up to the greater of £17.5 million and 4% of our global annual turnover for the preceding financial year for the most serious violations).
Many large customers have more complex IT environments and require higher levels of support than smaller customers. If we fail to meet the requirements of these larger customers, it may be more difficult to grow sales with them. 26 Table of Contents Additionally, it can take several months to recruit, hire, and train qualified engineering-level customer support employees.
Many large customers have more complex IT environments and require higher levels of support than smaller customers. If we fail to meet the requirements of these larger customers, it may be more difficult to grow sales with them. Additionally, it can take several months to recruit, hire, and train qualified engineering-level customer support employees.
In order to reduce manufacturing lead times and plan for adequate component supply, from time to time we may issue forecasts for components and products that are non-cancelable and nonreturnable. Our inventory management systems and related supply chain visibility tools may be inadequate to enable us to forecast accurately and effectively manage supply of our IoT devices.
In order to reduce manufacturing lead times and plan for adequate component supply, from time to time we may issue forecasts for components and products that are non-cancelable and nonreturnable. 23 Table of Contents Our inventory management systems and related supply chain visibility tools may be inadequate to enable us to forecast accurately and effectively manage supply of our IoT devices.
Customers with substantial or complex organizations may choose to deploy our solutions in large increments on a periodic basis. Accordingly, customers may purchase subscriptions for significant dollar amounts on an irregular and unpredictable basis. Because of our limited operating history and the nature of our business, we cannot predict the timing or cost of these sales and deployment cycles.
Customers with substantial or complex organizations may choose to deploy our solutions in large increments on a periodic basis. Accordingly, customers may purchase subscriptions for significant dollar amounts on an irregular and unpredictable basis. Because of the nature of our business, we cannot predict the timing or cost of these sales and deployment cycles.
Originally planned to be adopted and implemented at the same time as the GDPR, the ePrivacy Regulation is still being negotiated. Various United States privacy laws are potentially relevant to our business, including the Federal Trade Commission Act, Controlling the Assault of Non-Solicited Pornography and Marketing Act (“CAN-SPAM Act”), and the Telephone Consumer Protection Act.
Originally planned to be adopted and implemented at the same time as the GDPR, the ePrivacy Regulation is still being negotiated. Various United States privacy laws are potentially relevant to our business, including the Federal Trade Commission Act, Controlling the Assault of Non-Solicited Pornography and Marketing Act, and the Telephone Consumer Protection Act.
We are focused on increasing the size and effectiveness of our sales force, marketing activities, sales management team and corporate infrastructure, as well as exploring further relationships with third-party resellers.
We are focused on increasing the size and effectiveness of our sales force, marketing activities, sales management team and corporate infrastructure, as well as exploring further relationships with third-party resellers and channel partners.
Any such damages, penalties, disruption, or limitation in our ability to do business with a government could materially and adversely impact our business, results of operations, financial condition, public perception, and growth prospects. 45 Table of Contents We are required to comply with governmental export control, economic sanctions and import laws and regulations.
Any such damages, penalties, disruption, or limitation in our ability to do business with a government could materially and adversely impact our business, results of operations, financial condition, public perception, and growth prospects. We are required to comply with governmental export control, economic sanctions and import laws and regulations.
If we invest substantial time and resources to further expand our international operations and are unable to do so successfully and in a timely manner, our business and results of operations will suffer. 37 Table of Contents Risks Related to Our Intellectual Property Failure to protect our proprietary technology and intellectual property rights could substantially harm our business and results of operations.
If we invest substantial time and resources to further expand our international operations and are unable to do so successfully and in a timely manner, our business and results of operations will suffer. 34 Table of Contents Risks Related to Our Intellectual Property Failure to identify and protect our proprietary technology and intellectual property rights could substantially harm our business and results of operations.
Significant judgments, estimates, and assumptions used in preparing our consolidated financial statements include, or may in the future include, those related to revenue recognition, stock-based compensation, common stock valuations, and income taxes.
Significant judgments, estimates, and assumptions used in preparing our consolidated financial statements include, or may in the future include, those related to revenue recognition, stock-based compensation, and income taxes.
Our management team has limited experience managing a public company. Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies.
Our management team has limited experience managing a public company. Some members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies.
In addition, access to our supply chain in China may be further restricted by future U.S. actions taken against China, such as Chinese suppliers being targeted by U.S. sanctions or being added to lists of denied persons maintained by the U.S. Department of Commerce Bureau of Industry and Security (BIS).
In addition, access to our supply chain in China may be further restricted by U.S. actions taken against China, such as Chinese suppliers being targeted by U.S. sanctions or being added to lists of denied persons maintained by the U.S. Department of Commerce Bureau of Industry and Security (“BIS”).
If we are unable to achieve and sustain a level of liquidity sufficient to support our operations and fulfill our obligations, our business, financial condition, and results of operations could be adversely affected. We actively monitor and manage our cash and cash equivalents so that sufficient liquidity is available to fund our operations and other corporate purposes.
If we are unable to achieve and sustain a level of liquidity sufficient to support our operations and fulfill our obligations, our business, financial condition, and results of operations could be adversely affected. We actively monitor and manage our cash, cash equivalents, and marketable debt securities so that sufficient liquidity is available to fund our operations and other corporate purposes.
Production and marketing of products in certain states and countries may subject us to environmental and other regulations. In addition, certain states and countries may pass new regulations requiring our products to meet certain requirements to use environmentally friendly components. For example, the European Union has issued two directives relating to chemical substances in electronic products.
Production and marketing of products in certain states and countries may subject us to environmental and other regulations. In addition, certain states and countries may pass new regulations requiring our products to meet certain requirements to use environmentally friendly components. For example, the EU has issued two directives relating to chemical substances in electronic products.
Any decrease in the sales prices for access to our Connected Operations Cloud, without a corresponding decrease in costs or increase in sales volume, would adversely affect our revenue and gross profit. We may also have difficulty determining the appropriate price structure for new Applications.
Any decrease in the sales prices for access to our Connected Operations Cloud, without a corresponding decrease in costs or increase in sales volume, would adversely affect our revenue, gross profit and free cash flow. We may also have difficulty determining the appropriate price structure for new Applications.
Because our customers rely on our software and hardware to manage a wide range of operations, the incorrect implementation, use of, or our customers’ failure to update, our software and hardware or our failure to train customers on how to use our solution productively may result in customer dissatisfaction and negative publicity and may adversely affect our reputation and brand.
Because our customers rely on our software and hardware to manage a wide range of operations, the incorrect implementation or use of, or failure to update, our software and hardware or our failure to train customers on how to use our solution productively may result in customer dissatisfaction, negative publicity and litigation, which may adversely affect our reputation and brand.
While the European Union has deemed the United Kingdom an “adequate country” to which personal data could be exported from the EEA, this decision is required to be renewed after four years of being in effect and may be modified, revoked, or challenged in the interim.
While the EU has deemed the United Kingdom to be an “adequate country” to which personal data could be exported from the EEA, this decision is required to be renewed after four years of being in effect and may be modified, revoked, or challenged in the interim.
Many countries in the European Union, as well as a number of other countries and organizations such as the Organisation for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business.
Many countries in the EU, as well as a number of other countries and organizations such as the Organisation for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business.
We have agreed in certain customer contracts to indemnify customers, and have accepted tenders for indemnification from certain of such customers, for expenses or liabilities they incur as a result of third-party intellectual property infringement claims associated with our solution.
We have agreed in certain customer and channel partner contracts to indemnify customers and channel partners, and have accepted tenders for indemnification from certain of such customers, for expenses or liabilities they incur as a result of third-party intellectual property infringement claims associated with our solution.
If we do not maintain our prices and gross profits at levels that will allow us to achieve and maintain profitability, our business, financial condition, and results of operations will be harmed. 49 Table of Contents We recognize certain revenue streams over the term of our subscription contracts.
If we do not maintain our prices and gross profits at levels that will allow us to achieve and maintain profitability, our business, financial condition, and results of operations will be harmed. We recognize certain revenue streams over the term of our subscription contracts.
Further, any significant change to applicable laws, regulations or industry practices regarding the collection, use, retention, security or disclosure of data, or their interpretation, or any changes regarding the manner in which the consent of users or other data subjects for the collection, use, retention or disclosure of such data must be obtained, could increase our costs and require us to modify our Applications, possibly in a material manner, which we may be unable to complete, and may limit our ability to store and process user data or develop new Applications and features.
Further, any significant change to applicable laws, regulations or industry practices regarding the collection, use, retention, security or disclosure of data, or their interpretation, or any changes regarding the manner in which the approval, authorization, agreement, and/or consent of users or other data subjects for the collection, use, retention or disclosure of such data must be obtained or complied with, could increase our costs and require us to modify our Applications, possibly in a material manner, which we may be unable to complete, and may limit our ability to store and process user data or develop new Applications and features.
Under the Tax Cuts and Jobs Act, as modified by the Coronavirus Aid, Relief, and Economic Security Act, the deductibility of our federal NOL carryforwards generated in taxable years beginning after December 31, 2017 will be limited to 80% of taxable income in taxable years beginning after December 31, 2020.
Under the Tax Cuts and Jobs Act, as modified by the Coronavirus Aid, Relief, and Economic Security Act, the deductibility of our federal NOL carryforwards generated in taxable years beginning after December 31, 2017 is limited to 80% of taxable income in taxable years beginning after December 31, 2020.
Further, there are no assurances that adequate product liability insurance will continue to be available to us in the future on commercially reasonable terms or at all. Challenges in implementation or incorrect use of, or our customers’ failure to update, our solution could result in customer dissatisfaction and negatively affect our business and growth prospects.
Further, there are no assurances that adequate product liability insurance will continue to be available to us in the future on commercially reasonable terms or at all. 32 Table of Contents Challenges in implementation or incorrect use of, or failure to update, our solution could result in customer dissatisfaction and negatively affect our business and growth prospects.
Any dispute with a customer with respect to such obligations could have adverse effects on our relationship with that customer and other existing customers and new customers and harm our business and results of operations. 40 Table of Contents We rely on the availability of licenses to third-party technology that may be difficult to replace or that may cause errors or delay implementation of our solution should we not be able to continue or obtain a commercially reasonable license to such technology.
Any dispute with a customer or channel partner with respect to such obligations could have adverse effects on our relationship with that customer or channel partner and other existing customers and new customers and channel partners and harm our business and results of operations. 37 Table of Contents We rely on the availability of licenses to third-party technology that may be difficult to replace or that may cause errors or delay implementation of our solution should we not be able to continue or obtain a commercially reasonable license to such technology.
For example, in the United States, fleet operators face numerous complex regulatory requirements, including electronic logging requirements; compliance, safety and accountability driver safety scoring; limitations on hours of service; compliance and fuel tax reporting; among others. If these regulatory requirements were reduced or eliminated, our Applications for the fleet use case would have reduced utility to our customers.
For example, in the United States, fleet operators face numerous complex regulatory requirements, including electronic logging requirements; compliance, safety and accountability driver safety scoring; limitations on HOS; compliance and fuel tax reporting; among others. If these regulatory requirements were reduced or eliminated, our Applications for the fleet use case would have reduced utility to our customers.
For example, certain of our Applications compete with: • vendors like Verizon Connect and Geotab who provide a set of tools and reports focused on driver management, GPS tracking, asset tracking, and compliance; • vendors like Omnitracs who provide compliance or ELD focused applications; • vendors like Lytx and SmartDrive who provide safety-focused standalone camera and coaching tools; 28 Table of Contents • vendors focusing on equipment location tracking and diagnostics like Orbcomm and ZTR, as well as customer-developed solutions for more advanced or specialized monitoring and control solutions; or • security, surveillance and access control vendors like Avigilon, a Motorola Solutions company, that specialize in video analytics, AI, and network video management software.
For example, certain of our Applications compete with: • vendors like Omnitracs, Verizon Connect and Geotab who provide a set of tools and reports focused on driver management, GPS tracking, asset tracking, and compliance; • vendors like Lytx and SmartDrive who provide safety-focused standalone cameras and coaching tools; • vendors focusing on equipment location tracking and diagnostics like Orbcomm and ZTR, as well as customer-developed solutions for more advanced or specialized monitoring and control solutions; or • security, surveillance and access control vendors like Avigilon, a Motorola Solutions company, that specialize in video analytics, AI, and network video management software.
In some circumstances, we may not be able to comply with such standards, which could materially and adversely affect our ability to generate revenues through the sale of our products. 41 Table of Contents Reductions in regulation of our customers’ physical operations may adversely impact demand for certain of our solutions by reducing the necessity for, or desirability of, our solutions.
In some circumstances, we may not be able to comply with such standards or requirements, which could materially and adversely affect our ability to generate revenues through the sale of our products. Reductions in regulation of our customers’ physical operations may adversely impact demand for certain of our solutions by reducing the necessity for, or desirability of, our solutions.
Our Connected Operations Cloud is inherently complex and, despite extensive testing and quality control, has in the past contained and may in the future contain defects or errors, especially when first introduced, or not perform as contemplated.
Our Connected Operations Cloud is inherently complex and, despite extensive testing and quality control, has in the past contained and may in the future contain defects or errors, especially when features and Applications are first introduced, or not perform as contemplated.
Foreign Corrupt Practices Act (FCPA), U.S. domestic bribery laws, the UK Bribery Act, and similar laws and regulations in other jurisdictions; • burdens of complying with U.S. and non-U.S. export control laws and regulations, including Export Administration Regulations (EAR); and • burdens of complying with laws and regulations related to taxation; and regulations, adverse tax burdens, and foreign exchange controls that could make it difficult to repatriate earnings and cash.
Foreign Corrupt Practices Act (“FCPA”), U.S. domestic bribery laws, the UK Bribery Act, and similar laws and regulations in other jurisdictions; • burdens of complying with U.S. and non-U.S. export control laws and regulations, including Export Administration Regulations (“EAR”); and • burdens of complying with laws and regulations related to taxation; and regulations, adverse tax burdens, and foreign exchange controls that could make it difficult to repatriate earnings and cash.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of January 29, 2022, our principal offices consisted of approximately 84,000 square feet of leased property in San Francisco, California. We also lease office space for our operations in various locations throughout the United States, as well as office space in a number of countries in Europe, North America, and Asia.
Biggest changeAs of January 28, 2023, our principal offices consisted of approximately 133,000 square feet of leased property in San Francisco, California. We also lease office space for our operations in various locations throughout the United States, as well as office space in a number of countries in Europe, North America, and Asia.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Item 4. Mine Safety Disclosures Not applicable. 61 Table of Contents PART II
Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Item 4. Mine Safety Disclosures Not applicable. 58 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCompany/Index 12/15/2021 12/25/2021 01/29/2022 Samsara Inc. $ 100.00 $ 111.78 $ 67.45 S&P 500 Index $ 100.00 $ 100.34 $ 94.10 S&P 500 Information Technology Index $ 100.00 $ 99.67 $ 90.77 Item 6. [Reserved] 63 Table of Contents
Biggest changeCompany/Index 12/15/2021 01/29/2022 04/30/2022 07/30/2022 10/29/2022 01/28/2023 Samsara Inc. $ 100.00 $ 67.45 $ 49.96 $ 58.54 $ 50.16 $ 55.71 S&P 500 Index $ 100.00 $ 94.10 $ 87.73 $ 87.69 $ 82.83 $ 86.43 S&P 500 Information Technology Index $ 100.00 $ 90.77 $ 81.21 $ 82.67 $ 74.45 $ 78.19 Item 6. [Reserved] 60 Table of Contents
Issuer Purchases of Equity Securities None. 62 Table of Contents Stock Performance Graph The following shall not be deemed “soliciting material” or deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section, and shall not be deemed to be incorporated by reference into any of our other filings under the Exchange Act or the Securities Act.
Issuer Purchases of Equity Securities None. 59 Table of Contents Stock Performance Graph The following shall not be deemed “soliciting material” or deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section, and shall not be deemed to be incorporated by reference into any of our other filings under the Exchange Act or the Securities Act.
Because many of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. • Class B common stock: 75 stockholders of record. • Class C common stock: There were no shares outstanding.
Because many of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these holders. • Class B common stock: 58 stockholders of record. • Class C common stock: There were no shares outstanding.
The performance graph below compares (i) the cumulative total return on our common stock from December 15, 2021 (the date our Class A common stock commenced trading on the New York Stock Exchange) through January 29, 2022 with (ii) the cumulative total return of the S&P 500 Index and the S&P 500 Information Technology Index over the same period, assuming the investment of $100 in our Class A common stock and in both of the other indices on December 15, 2021 and the reinvestment of dividends.
The performance graph below compares (i) the cumulative total return on our Class A common stock from December 15, 2021 (the date our Class A common stock commenced trading on the New York Stock Exchange) through January 28, 2023 (the last day in our fiscal year 2023) with (ii) the cumulative total return of the S&P 500 Index and the S&P 500 Information Technology Index over the same period, assuming the investment of $100 in our Class A common stock and in both of the other indices on December 15, 2021 and the reinvestment of dividends.
There has been no material change in the planned use of proceeds from the IPO as described in our final prospectus dated December 14, 2021 and filed on December 15, 2021 with the SEC pursuant to Rule 424(b) under the Securities Act. The managing underwriters of the IPO were Morgan Stanley & Co. LLC, Goldman Sachs & Co.
There has been no material change in the planned use of proceeds from the IPO as described in our final prospectus dated December 14, 2021 and filed on December 15, 2021 with the SEC pursuant to Rule 424(b) under the Securities Act.
Our Class B and Class C common stock are neither listed nor publicly traded. Holders of Record Holders of our common stock as of January 29, 2022 were as follows: • Class A common stock: four stockholders of record.
Our Class B and Class C common stock are neither listed nor publicly traded. Holders of Record Holders of our common stock as of January 28, 2023 were as follows: • Class A common stock: 47 stockholders of record.
This option exercise closed on January 19, 2022, resulting in additional net proceeds to us of $77.9 million after deducting underwriting discounts and commissions. Our Registration Statement on Form S-1 (File No. 333-261204) for our IPO was declared effective by the Securities and Exchange Commission (“SEC”) on December 14, 2021.
The offer and sale of the shares in the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-261204), which was declared effective by the Securities and Exchange Commission (“SEC”) on December 14, 2021.
Removed
Unregistered Sales of Equity Securities From January 31, 2021 through December 15, 2021 (the date of the filing of our registration statement on Form S-8), we granted to our directors, officers, employees, consultants and other service providers RSUs covering an aggregate of 18,793,377 shares of our Class B common stock under our 2015 Equity Incentive Plan (“2015 Plan”).
Added
Unregistered Sales of Equity Securities None. Use of Proceeds On December 17, 2021, we completed our initial public offering (“IPO”).
Removed
We also issued an aggregate of 2,457,899 shares of our Class B common stock upon exercise of stock options granted under our 2015 Plan at exercise prices ranging from approximately $0.05 per share to $3.51 per share.
Removed
Use of Proceeds On December 17, 2021, we completed our initial public offering (“IPO”), in which we issued and sold 35,000,000 shares of our Class A common stock at the public offering price of $23.00 per share, resulting in net proceeds of $768.8 million after deducting underwriting discounts and commissions.
Removed
On January 13, 2022, the underwriters exercised their option to purchase an additional 3,546,882 shares of our Class A common stock at the public offering price of $23.00 per share, resulting in total issued shares of 38,546,882.
Removed
LLC, and J.P. Morgan Securities LLC. No payments were made by us to directors, officers, or persons owning 10% or more of our common stock or to their associates, or to our affiliates, other than payments in the ordinary course of business to officers for salaries and to non-employee directors pursuant to our director compensation policy.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCost of Revenue, Gross Profit, and Gross Margin Our cost of revenue, gross profit, and gross margin are summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 29, 2022 January 30, 2021 Amount % Cost of revenue $ 124,484 $ 75,393 $ 49,091 65 % Gross profit $ 303,861 $ 174,512 Gross margin 71 % 70 % Cost of revenue increased by $49.1 million, or 65%, for the fiscal year ended January 29, 2022 compared to the fiscal year ended January 30, 2021, primarily due to increased product costs of $37.1 million, which were mainly due to $18.6 million of increased amortization of deferred IoT device costs, $13.9 million of increased direct labor and selling costs, of which $6.0 million was an increase in stock-based compensation expense primarily attributable to the vesting of RSUs upon satisfaction of the performance condition in connection with our IPO in December 2021, and $4.7 million of increased cloud hosting costs.
Biggest changeResults of Operations Comparison of the Fiscal Years Ended January 28, 2023 and January 29, 2022 Revenue Our total revenue is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 28, 2023 January 29, 2022 Amount % Revenue $ 652,545 $ 428,345 $ 224,200 52 % Revenue increased by $224.2 million, or 52%, for the fiscal year ended January 28, 2023 compared to the fiscal year ended January 29, 2022, primarily due to an increase in customer count and increased purchases by existing customers of our subscription offerings, including subscriptions to additional applications. 65 Table of Contents Cost of Revenue, Gross Profit, and Gross Margin Our cost of revenue, gross profit, and gross margin are summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 28, 2023 January 29, 2022 Amount % Cost of revenue $ 182,656 $ 124,484 $ 58,172 47 % Gross profit $ 469,889 $ 303,861 Gross margin 72 % 71 % Cost of revenue increased by $58.2 million, or 47%, for the fiscal year ended January 28, 2023 compared to the fiscal year ended January 29, 2022, primarily due to $27.6 million of increased amortization of deferred IoT device costs, $16.9 million of increased direct labor costs, of which $2.8 million was an increase in stock-based compensation expense, $9.1 million of increased infrastructure costs associated with our product offerings, and $2.8 million of increased warranty costs, partially offset by $1.2 million of reduced freight costs.
Operating Expenses Research and Development Research and development costs consist primarily of employee-related costs, including salaries, employee benefits and stock-based compensation, depreciation and other expenses related to prototyping IoT devices, product initiatives, software subscriptions, hosting used in research and development, and allocated overhead costs.
Operating Expenses Research and Development Research and development expenses consist primarily of employee-related costs, including salaries, employee benefits and stock-based compensation, depreciation and other expenses related to prototyping IoT devices, product initiatives, software subscriptions, hosting used in research and development, and allocated overhead costs.
Financing Activities Cash provided by financing activities was $701.6 million for the fiscal year ended January 29, 2022, which primarily consisted of $846.7 million of net proceeds from the IPO and $1.4 million of net proceeds from exercises of stock options, partially offset by $141.7 million of tax payments related to the net share settlement of equity awards and $4.1 million in payments of offering costs.
Cash provided by financing activities was $701.6 million for the fiscal year ended January 29, 2022, which primarily consisted of $846.7 million of net proceeds from the IPO and $1.4 million of proceeds from exercises of stock options, partially offset by $141.7 million of tax payments related to the net share settlement of equity awards and $4.1 million in payments of offering costs.
Specifically, our connected devices, including the embedded proprietary firmware, are updated continuously by our Connected Operations Cloud using artificial intelligence (“AI”) and machine learning models to improve the capture, aggregation, and enrichment of data by the connected devices.
Specifically, our connected devices, including the embedded proprietary firmware, are updated continuously by our Connected Operations Cloud using artificial intelligence and machine learning models to improve the capture, aggregation, and enrichment of data by the connected devices.
We primarily sell through a direct sales force, which focuses on landing and expanding large and mid-market customers with numerous physical assets. We also sell through resellers, which expands our reach and allows us to access certain customer segments more efficiently. Additionally, we offer self-service and low-touch inbound sales to attract a broad range of small customers onto our platform.
We primarily sell through a direct sales force, which focuses on landing and expanding large and mid-market customers with numerous physical assets. We also sell through resellers, which expands our reach and allows us to access certain customer channels more efficiently. Additionally, we offer self-service and low-touch inbound sales to attract a broad range of small customers onto our platform.
The critical accounting estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements are described below. 79 Table of Contents Revenue Recognition Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.
The critical accounting estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements are described below. 72 Table of Contents Revenue Recognition Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.
We expect our research and development expenses to increase in absolute dollars for the foreseeable future as we continue to invest in research and development efforts to enhance our Connected Operations Cloud.
We expect our research and development expenses to generally increase in absolute dollars for the foreseeable future as we continue to invest in research and development efforts to enhance our Connected Operations Cloud.
Expanding Within Our Existing Customer Base We believe that there is a significant opportunity to expand sales to existing customers following a customer’s initial adoption of our Connected Operations Cloud. We expand within our customer base by selling more Applications and expanding existing Applications across geographies and divisions.
Expanding Within Our Existing Customer Base We believe that there is a significant opportunity to expand sales to existing customers following their initial adoption of our Connected Operations Cloud. We expand within our customer base by selling more Applications and expanding existing Applications across geographies and divisions.
Our primary uses of cash from operating activities are for employee-related expenses, sales and marketing expenses, connected device costs, third-party cloud and cellular infrastructure expenses, and overhead expenses. We have generated negative cash flows from operations in each of the past three fiscal years, and have supplemented working capital through net proceeds from the sale of equity securities.
Our primary uses of cash from operating activities are for employee-related expenses, sales and marketing expenses, inventory and connected device costs, third-party cloud and cellular infrastructure expenses, and overhead expenses. We have generated negative cash flows from operations in each of the past two fiscal years, and have supplemented working capital through net proceeds from the sale of equity securities.
Our ARR has grown in each of the past three fiscal years, reflecting growth in new customers as well as expanded sales to existing customers. 67 Table of Contents Number of Customers Over $100,000 in ARR We focus on customers representing over $100,000 in ARR, as this key business metric is indicative of our penetration within larger customers.
Our ARR has grown in each of the past three fiscal years, reflecting growth in new customers as well as expanded sales to existing customers. Number of Customers Over $100,000 in ARR We focus on customers representing over $100,000 in ARR, as this key business metric is indicative of our penetration within larger customers.
Overhead costs that are not substantially dedicated to use by a specific functional group are allocated based on headcount. Such costs include costs associated with office facilities, depreciation of property and equipment, and other expenses, such as corporate software and subscription services, insurance, and commuter benefits.
Allocation of Overhead Costs Overhead costs that are not substantially dedicated to use by a specific functional group are allocated based on headcount. Such costs include costs associated with office facilities, depreciation of property and equipment, and other expenses, such as corporate software, subscription services, and insurance.
We expect our general and administrative expenses to continue to increase in absolute dollars for the foreseeable future to support our growth as well as due to additional costs associated with legal, accounting, compliance, insurance, investor relations, and other costs as we become a public company.
We expect our general and administrative expenses to continue to increase in absolute dollars for the foreseeable future to support our growth as well as due to additional costs associated with legal, accounting, compliance, insurance, investor relations, and other areas associated with being a public company.
A subscription to our Connected Operations Cloud includes IoT data collection, which usually comes from a Samsara IoT device, such as an Internet gateway, camera or sensor, or at times from a third-party solution; cellular connectivity for our IoT devices; access to our cloud Applications, APIs and the Samsara App Marketplace; customer support; and warranty coverage.
A subscription to our Connected Operations Cloud includes IoT data collection, which usually comes from a Samsara IoT device, such as an internet gateway, camera or sensor, or at times from a third-party solution; cellular connectivity for our IoT devices; access to our cloud Applications, application programming interfaces, and the Samsara App Marketplace; customer support; and warranty coverage.
While we expect our cost of revenue to decrease as a percentage of our revenue over the long term, our cost of revenue expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.
While we expect our sales and marketing expenses to decrease as a percentage of our revenue over the long term, our sales and marketing expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.
The timing of large multi-year contracts can create some variability in billings between periods, though the impact to our annual or quarterly revenue is minimal due to the fact that we recognize revenue ratably over the term of our customer contracts. Our go-to-market strategy is focused on landing new customers and expanding their adoption of our Connected Operations Cloud.
The timing of large multi-year contracts can create some variability in billings between periods, though the impact to our annual or quarterly revenue is minimal, as we recognize revenue ratably over the term of our customer contracts. 61 Table of Contents Our go-to-market strategy is focused on landing new customers and expanding their adoption of our Connected Operations Cloud.
Our future capital requirements will depend on many factors, including, but not limited to, our growth, our ability to attract and retain customers, the continued market acceptance of our solution, the timing and extent of spending to support our efforts to develop our Connected Operations Cloud, and the expansion of sales and marketing activities.
Our future capital requirements will depend on many factors, including, but not limited to, our growth, our ability to attract and retain customers, the continued market acceptance of our solution, the timing and extent of spending to support our efforts to develop our Connected Operations Cloud, the expansion of sales and marketing activities, and the impact of macroeconomic conditions on our and our customers’ and partners’ businesses.
Investing Activities Cash used in investing activities was $20.0 million for the fiscal year ended January 29, 2022, which primarily consisted of capital expenditures for additional office facilities. Cash used in investing activities was $32.2 million for the fiscal year ended January 30, 2021, which primarily consisted of capital expenditures for additional office facilities.
Cash used in investing activities was $20.0 million for the fiscal year ended January 29, 2022, which primarily consisted of capital expenditures for additional office facilities.
In each of the past three fiscal years, we generated approximately 98% of our revenue from subscriptions to our Connected Operations Cloud.
In each of our past two fiscal years, we generated approximately 98% of our revenue from subscriptions to our Connected Operations Cloud.
Customers representing over $100,000 in ARR generally adopt more Applications than our overall customer base. For example, as of January 29, 2022, 90% of these customers use two or more Applications and approximately 50% use three or more Applications.
Customers representing over $100,000 in ARR generally adopt more Applications than our overall customer base. For example, as of January 28, 2023, more than 90% of these customers use two or more Applications and more than 50% use three or more Applications.
Two of our Applications, Video-based Safety and Vehicle Telematics, each represented more than $200 million of ARR as of January 29, 2022, demonstrating the flexibility of our solution and our ability to develop and grow new Applications. Our key focus is multi-application adoption.
Two of our Applications, Video-Based Safety and Vehicle Telematics, each represented more than $300 million of ARR as of January 28, 2023, demonstrating the flexibility of our solution and our ability to develop and grow new Applications. Our key focus is multi-application adoption.
Our subscription contracts generally are non-cancelable and non-refundable, transfer title to the connected device to the customer upon shipment, provide access to the platform for a contractual term of three to five years, and are invoiced monthly, quarterly, annually, or in advance.
Our subscription contracts generally are non-cancelable and non-refundable, subject to limited exceptions under our standard terms of service, transfer title to the connected device to the customer upon shipment, provide access to the platform for a contractual term of three to five years, and are invoiced monthly, quarterly, annually, or in advance.
Contractual Obligations and Commitments Our estimated future obligations consist of leases and non-cancelable purchase commitments as of January 29, 2022. For additional discussion on our leases and other commitments, refer to Notes 5, “Leases,” and 6, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Contractual Obligations and Commitments Our estimated future obligations consist of leases and non-cancelable purchase commitments as of January 28, 2023. For additional discussion on our leases and other commitments, refer to Notes 7, “Leases,” and 9, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Our subscription contracts are typically for a three-to-five-year term and are generally non-cancelable and non-refundable. Our Connected Operations Cloud and IoT devices are highly interdependent and interrelated, and represent a combined performance obligation within the context of the contract.
Our subscription contracts are typically for a three-to-five-year term and are generally non-cancelable and non-refundable, subject to limited exceptions under our standard terms of service. Our Connected Operations Cloud and IoT devices are highly interdependent and interrelated, and represent a combined performance obligation within the context of the contract.
Our ability to attract new customers depends on a number of factors, including the effectiveness of our sales and marketing efforts, as well as the success of our efforts to expand internationally.
Our ability to attract new customers depends on a number of factors, including the effectiveness of our sales and marketing efforts, macroeconomic factors and their impact on our customers’ businesses, as well as the success of our efforts to expand internationally.
As of January 29, 2022, over 70% of our Core Customers and 90% of our customers representing over $100,000 in ARR are using multiple Applications.
As of January 28, 2023, over 70% of our Core Customers and 90% of our customers representing over $100,000 in ARR are using multiple Applications.
Our net loss was $355.0 million and $210.2 million for the fiscal years ended January 29, 2022 and January 30, 2021, respectively. Our business model focuses on maximizing the lifetime value of our customer relationships and we continue to make significant investments in order to grow our customer base.
Our net loss was $247.4 million and $355.0 million for the fiscal years ended January 28, 2023 and January 29, 2022, respectively. Our business model focuses on maximizing the lifetime value of our customer relationships and we continue to make significant investments in order to grow our customer base.
Customers representing over $100,000 in ARR generally contribute higher revenue, land with multiple products, have higher retention rates, and demonstrate stronger unit economics. The number of our customers representing over $100,000 in ARR has increased over time from 452 as of January 30, 2021 to 806 customers as of January 29, 2022.
These customers generally contribute higher revenue, land with multiple products, have higher retention rates, and demonstrate stronger unit economics. The number of our customers representing over $100,000 in ARR has increased over time from 806 as of January 29, 2022 to 1,237 customers as of January 28, 2023.
As we have expanded our global operations, our exposure to fluctuations in foreign currencies has increased, and we expect this to continue. Provision for Income Taxes Provision for income taxes consists primarily of income taxes in certain foreign and state jurisdictions in which we conduct business.
We also have foreign currency remeasurement gains and losses and foreign currency transaction gains and losses. As we have expanded our global operations, our exposure to fluctuations in foreign currencies has increased, and we expect this to continue. Provision for Income Taxes Provision for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business.
Our Customers As of January 29, 2022, we had more than 14,000 customers representing over $5,000 in annual recurring revenue (“ARR”), or Core Customers, and approximately 93% of our ARR came from Core Customers, in part due to our increasing focus on this customer set.
Our Customers As of January 28, 2023, we had more than 19,000 customers representing over $5,000 in annual recurring revenue (“ARR”), or Core Customers, and approximately 95% of our ARR came from Core Customers, in part due to our increasing focus on this customer set.
We use non-GAAP net loss in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that non-GAAP net loss provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations.
We believe that non-GAAP net loss provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations.
Refer to the section titled “Risk Factors” for further discussion of the possible impact of the COVID-19 pandemic on our business. 69 Table of Contents Components of Results of Operations Revenue We provide access to our Connected Operations Cloud through subscription arrangements, whereby the customer is charged a per-subscription fee for access for a specified term.
Refer to the section titled “Risk Factors” for further discussion of the impacts of macroeconomic trends on our business. 63 Table of Contents Components of Results of Operations Revenue We provide access to our Connected Operations Cloud through subscription arrangements, whereby the customer is charged a per-subscription fee for access for a specified term.
The following table presents a reconciliation of our non-GAAP gross profit to our GAAP gross profit for the periods presented (in thousands, except percentages): Fiscal Year Ended January 29, 2022 January 30, 2021 February 1, 2020 Gross profit $ 303,861 $ 174,512 $ 71,543 Add: Stock-based compensation expense-related charges (1) 6,344 13 6 Non-GAAP gross profit $ 310,205 $ 174,525 $ 71,549 Non-GAAP gross margin 72 % 70 % 60 % __________ (1) Stock-based compensation expense-related charges included approximately $0.3 million of employer taxes on employee equity transactions for the fiscal year ended January 29, 2022. 76 Table of Contents Non-GAAP Loss from Operations and Non-GAAP Operating Margin We define non-GAAP loss from operations, or non-GAAP operating loss, as loss from operations plus stock-based compensation expense-related charges, including employer taxes on employee equity transactions, compensation expense resulting from tender offers, lease modification, impairment, and related charges, and restructuring and related charges.
The following table presents a reconciliation of our non-GAAP gross profit to our GAAP gross profit for the periods presented (in thousands, except percentages): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Gross profit $ 469,889 $ 303,861 $ 174,512 Add: Stock-based compensation expense-related charges (1) 9,466 6,344 13 Non-GAAP gross profit $ 479,355 $ 310,205 $ 174,525 GAAP gross margin 72 % 71 % 70 % Non-GAAP gross margin 73 % 72 % 70 % __________ (1) Stock-based compensation expense-related charges included approximately $0.3 million and $0.3 million of employer taxes on employee equity transactions for the fiscal years ended January 28, 2023 and January 29, 2022, respectively. 69 Table of Contents Non-GAAP Loss from Operations and Non-GAAP Operating Margin We define non-GAAP loss from operations, or non-GAAP operating loss, as loss from operations plus stock-based compensation expense-related charges, including employer taxes on employee equity transactions, lease modification, impairment, and related charges, and restructuring and related charges.
This section of this Annual Report on Form 10-K generally discusses fiscal years 2022 and 2021 items and year-to-year comparisons between fiscal years 2022 and 2021 in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
This section of our Annual Report on Form 10-K generally discusses our financial condition and results of operations for fiscal years 2023 and 2022, and year-to-year comparisons between fiscal years 2023 and 2022 in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Our customer counts fluctuate from period to period, including due to customer mergers, acquisitions, consolidations, spin-offs, and other market activity. We have a very diverse customer base and no significant customer concentration, with no single customer accounting for more than 2% of our ARR for the fiscal year ended January 29, 2022.
Our customer counts fluctuate from period to period, including due to customer mergers, acquisitions, consolidations, spin-offs, and other market activity. We have a very diverse customer base and no significant customer concentration, with no single customer accounting for more than 1% of our ARR as of January 28, 2023.
We were founded in 2015 and have achieved significant growth since our inception. For our fiscal years ended January 29, 2022 and January 30, 2021, our revenue was $428.3 million and $249.9 million, respectively, representing year-over-year growth of 71%.
We were founded in 2015 and have achieved significant growth since our inception. For our fiscal years ended January 28, 2023 and January 29, 2022, our revenue was $652.5 million and $428.3 million, respectively, representing year-over-year growth of 52%.
The following table presents a reconciliation of adjusted free cash flow to net cash used in operating activities for the periods presented (in thousands, except percentages): Fiscal Year Ended January 29, 2022 January 30, 2021 February 1, 2020 Net cash used in operating activities $ (171,481) $ (171,769) $ (192,525) Purchase of property and equipment (19,353) (32,102) (29,990) Purchase of property and equipment for build-out of corporate office facilities 11,096 14,319 6,408 Adjusted free cash flow $ (179,738) $ (189,552) $ (216,107) Adjusted free cash flow margin (42) % (76) % (180) % Net cash used in investing activities $ (20,035) $ (32,202) $ (29,990) Net cash provided by financing activities $ 701,644 $ 401,974 $ 295,853 Liquidity and Capital Resources Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations.
The following table presents a reconciliation of adjusted free cash flow to net cash used in operating activities for the periods presented (in thousands, except percentages): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Net cash used in operating activities $ (103,021) $ (171,481) $ (171,769) Purchase of property and equipment (33,240) (19,353) (32,102) Purchase of property and equipment for build-out of corporate office facilities 26,227 11,096 14,319 Adjusted free cash flow $ (110,034) $ (179,738) $ (189,552) Net cash used in operating activities margin (16) % (40) % (69) % Adjusted free cash flow margin (17) % (42) % (76) % Net cash used in investing activities $ (631,848) $ (20,035) $ (32,202) Net cash provided by financing activities $ 14,212 $ 701,644 $ 401,974 Liquidity and Capital Resources Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations.
As a result of our leasing activities, we recognized $1.5 million in lease modification, impairment, and related charges for the fiscal year ended January 29, 2022. See Note 5, “Leases,” to our consolidated financial statements for further information.
As a result of our leasing activities, we recognized $1.5 million in lease modification, impairment, and related charges for the fiscal year ended January 29, 2022.
We believe that our existing cash and cash equivalents will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. As of January 29, 2022, our principal sources of liquidity were cash and cash equivalents of $921.2 million.
We believe that our existing cash, cash equivalents, and short-term and long-term investments will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. As of January 28, 2023, our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments of $803.0 million.
The following table presents a reconciliation of our non-GAAP net loss to our GAAP net loss for the periods presented (in thousands, except percentages): Fiscal Year Ended January 29, 2022 January 30, 2021 February 1, 2020 Net loss $ (355,024) $ (210,208) $ (225,224) Add: Stock-based compensation expense-related charges 238,238 25,564 2,868 Compensation expense in connection with 2019 tender offer — — 5,341 Lease modification, impairment, and related charges 1,532 — — Restructuring and related charges — 6,768 — Non-GAAP net loss $ (115,254) $ (177,876) $ (217,015) 77 Table of Contents Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin We define adjusted free cash flow as net cash used in operating activities less cash used for purchases of property and equipment, plus non-recurring capital expenditures associated with the build-out of our corporate office facilities in San Francisco, which we expect to be completed in fiscal year 2023, net of tenant allowances.
The following table presents a reconciliation of our non-GAAP net loss to our GAAP net loss for the periods presented (in thousands, except percentages): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Net loss $ (247,422) $ (355,024) $ (210,208) Add: Stock-based compensation expense-related charges, net of applicable taxes 181,424 238,238 25,564 Lease modification, impairment, and related charges, net of applicable taxes 1,056 1,532 — Restructuring and related charges — — 6,768 Non-GAAP net loss $ (64,942) $ (115,254) $ (177,876) 70 Table of Contents Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin We define adjusted free cash flow as net cash used in operating activities reduced by cash used for purchases of property and equipment, plus non-recurring capital expenditures associated with the build-out of our corporate office facilities in San Francisco, California, net of tenant allowances.
As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements applicable to public companies. Recent Accounting Pronouncements For information on recently issued accounting pronouncements, see Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Accordingly, we are required to comply with the new or revised accounting pronouncements as of the effective dates applicable to public companies that are not emerging growth companies. Recent Accounting Pronouncements For information on recently issued accounting pronouncements, see Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Lease Modification, Impairment, and Related Charges Lease modification, impairment, and related charges are summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 29, 2022 January 30, 2021 Amount % Lease modification, impairment, and related charges $ 1,532 $ — $ 1,532 * __________ * Not meaningful Lease modification, impairment, and related charges increased by $1.5 million for the fiscal year ended January 29, 2022 compared to the fiscal year ended January 30, 2021.
Lease Modification, Impairment, and Related Charges Lease modification, impairment, and related charges are summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 28, 2023 January 29, 2022 Amount % Lease modification, impairment, and related charges $ 1,056 $ 1,532 $ (476) (31 %) Lease modification, impairment, and related charges decreased by $0.5 million, or 31%, for the fiscal year ended January 28, 2023 compared to the fiscal year ended January 29, 2022.
We plan to continue to invest in sales and marketing to grow our customer base and increase our brand awareness. As a result, we expect our sales and marketing expenses to increase in absolute dollars for the foreseeable future.
As a result, we expect our sales and marketing expenses to increase in absolute dollars for the foreseeable future.
Investments in Innovation and Future Growth Our performance is driven by continuous innovation on our Connected Operations Cloud and our ability to scale our headcount to grow our business. We continuously invest to add new data types to our Connected Operations Cloud and innovate with this growing data asset to introduce new Applications over time.
We continuously invest in adding new data types to our Connected Operations Cloud and innovate with this growing data asset to introduce new Applications over time. Our performance is also impacted by our ability to scale our headcount across our business to support our growth.
Provision for Income Taxes Provision for income taxes is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 29, 2022 January 30, 2021 Amount % Provision for income taxes $ 1,174 $ 87 $ 1,087 * Effective tax rate (0.3 %) 0.0 % __________ * Not meaningful The provision for income taxes increased by $1.1 million for the fiscal year ended January 29, 2022 compared to the fiscal year ended January 30, 2021, primarily driven by our international operations.
Provision for Income Taxes Provision for income taxes is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 28, 2023 January 29, 2022 Amount % Provision for income taxes $ 3,587 $ 1,174 $ 2,413 206 % Effective tax rate (1.5 %) (0.3 %) The provision for income taxes increased by $2.4 million, or 206%, for the fiscal year ended January 28, 2023 compared to the fiscal year ended January 29, 2022, primarily driven by the expansion of our international operations.
The following table presents a reconciliation of our non-GAAP loss from operations to our GAAP loss from operations for the periods presented (in thousands, except percentages): Fiscal Year Ended January 29, 2022 January 30, 2021 February 1, 2020 Loss from operations $ (353,848) $ (209,479) $ (227,818) Add: Stock-based compensation expense-related charges (1) 238,238 25,564 2,868 Compensation expense in connection with 2019 tender offer (2) — — 5,341 Lease modification, impairment, and related charges 1,532 — — Restructuring and related charges — 6,768 — Non-GAAP loss from operations $ (114,078) $ (177,147) $ (219,609) Non-GAAP operating margin (27) % (71) % (183) % __________ (1) Stock-based compensation expense-related charges included approximately $9.5 million of employer taxes on employee equity transactions for the fiscal year ended January 29, 2022.
The following table presents a reconciliation of our non-GAAP loss from operations to our GAAP loss from operations for the periods presented (in thousands, except percentages): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Loss from operations $ (259,455) $ (353,848) $ (209,479) Add: Stock-based compensation expense-related charges (1) 181,424 238,238 25,564 Lease modification, impairment, and related charges 1,056 1,532 — Restructuring and related charges — — 6,768 Non-GAAP loss from operations $ (76,975) $ (114,078) $ (177,147) GAAP operating margin (40) % (83) % (84) % Non-GAAP operating margin (12) % (27) % (71) % __________ (1) Stock-based compensation expense-related charges included approximately $4.0 million and $9.5 million of employer taxes on employee equity transactions for the fiscal years ended January 28, 2023 and January 29, 2022, respectively.
Non-GAAP Financial Measures We review the following non-GAAP financial measures to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions (in thousands, except percentages): Fiscal Year Ended January 29, 2022 January 30, 2021 February 1, 2020 Non-GAAP gross profit $ 310,205 $ 174,525 $ 71,549 Non-GAAP gross margin 72 % 70 % 60 % Non-GAAP loss from operations $ (114,078) $ (177,147) $ (219,609) Non-GAAP operating margin (27) % (71) % (183) % Non-GAAP net loss $ (115,254) $ (177,876) $ (217,015) Adjusted free cash flow $ (179,738) $ (189,552) $ (216,107) Adjusted free cash flow margin (42) % (76) % (180) % 75 Table of Contents Limitations and Reconciliations of Non-GAAP Financial Measures Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under GAAP.
Non-GAAP Financial Measures To supplement our consolidated financial statements prepared in accordance with GAAP, we review the following non-GAAP financial measures to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions (in thousands, except percentages): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Non-GAAP gross profit $ 479,355 $ 310,205 $ 174,525 Non-GAAP gross margin 73 % 72 % 70 % Non-GAAP loss from operations $ (76,975) $ (114,078) $ (177,147) Non-GAAP operating margin (12) % (27) % (71) % Non-GAAP net loss $ (64,942) $ (115,254) $ (177,876) Net cash used in operating activities $ (103,021) $ (171,481) $ (171,769) Adjusted free cash flow $ (110,034) $ (179,738) $ (189,552) Adjusted free cash flow margin (17) % (42) % (76) % 68 Table of Contents Limitations and Reconciliations of Non-GAAP Financial Measures Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under GAAP.
Cash used in operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation, non-cash operating lease costs, depreciation and amortization of property and equipment, and changes in operating assets and liabilities during each period. Cash used in operating activities was $171.5 million for the fiscal year ended January 29, 2022.
Cash used in operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation, non-cash operating lease costs, depreciation and amortization of property and equipment, lease modification, impairment, and related charges, and changes in operating assets and liabilities during each period.
This consisted of a net loss of $355.0 million, adjusted for non-cash charges of $247.3 million, and changes in our operating assets and liabilities of $63.7 million.
Cash used in operating activities was $171.5 million for the fiscal year ended January 29, 2022. This consisted of a net loss of $355.0 million, adjusted for non-cash charges of $247.3 million, and changes in our operating assets and liabilities of $63.7 million.
The non-cash charges were primarily comprised of stock-based compensation expense of $228.7 million, depreciation and amortization of $10.4 million, bad debt expense of $7.4 million, and lease modification, impairment, and related charges of $1.5 million. Cash used in operating activities was $171.8 million for the fiscal year ended January 30, 2021.
The non-cash charges were primarily comprised of stock-based compensation expense of $228.7 million, depreciation and amortization of $10.4 million, bad debt expense of $7.4 million, and lease modification, impairment, and related charges of $1.5 million.
We have generated significant operating losses from our operations, as reflected in our accumulated deficit of $921.0 million as of January 29, 2022.
We have generated significant operating losses from our operations, as reflected in our accumulated deficit of $1,168.4 million as of January 28, 2023.
Interest Income and Other Income (Expense), Net Interest income and other income (expense), net, are summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 29, 2022 January 30, 2021 Amount % Interest income and other income (expense), net $ (2) $ (642) $ 640 (100 %) Interest income and other income (expense), net, decreased by $0.6 million, or 100%, for the fiscal year ended January 29, 2022 compared to the fiscal year ended January 30, 2021.
Interest Income and Other Income (Expense), Net Interest income and other income (expense), net, are summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 28, 2023 January 29, 2022 Amount % Interest income and other income (expense), net $ 15,620 $ (2) $ 15,622 * __________ * Not meaningful Interest income and other income (expense), net, increased by $15.6 million for the fiscal year ended January 28, 2023 compared to the fiscal year ended January 29, 2022.
Cash Flows The following table shows a summary of our cash flows for the periods presented (in thousands): Fiscal Year Ended January 29, 2022 January 30, 2021 February 1, 2020 Net cash used in operating activities $ (171,481) $ (171,769) $ (192,525) Net cash used in investing activities $ (20,035) $ (32,202) $ (29,990) Net cash provided by financing activities $ 701,644 $ 401,974 $ 295,853 78 Table of Contents Operating Activities Our largest source of operating cash is payments received from our customers.
Cash Flows The following table shows a summary of our cash flows for the periods presented (in thousands): Fiscal Year Ended January 28, 2023 January 29, 2022 Net cash used in operating activities $ (103,021) $ (171,481) Net cash used in investing activities $ (631,848) $ (20,035) Net cash provided by financing activities $ 14,212 $ 701,644 71 Table of Contents Operating Activities Our largest source of operating cash is payments received from our customers.
We price our subscriptions on a per asset, per application basis. For example, one vehicle using two Applications (video-based safety and vehicle telematics) would count as two subscriptions.
We price our subscriptions on a per asset, per application basis. For example, one vehicle using two Applications (Video-Based Safety and Vehicle Telematics) would count as two subscriptions. Our Connected Operations Cloud is designed to be a digital hub for our customers and a mission-critical part of their operations.
In the third fiscal quarter of 2022, we determined that we no longer had the right to control the use of a certain office location and accordingly accounted for a lease modification for such facility, and also impaired and ceased using other leased office spaces.
In the first quarter of fiscal year 2023, we executed a sublease for certain office space which resulted in a $1.1 million impairment to the related ROU asset which we recognized in lease modification, impairment, and related charges for the fiscal year ended January 28, 2023. 67 Table of Contents In the third quarter of fiscal year 2022, we determined that we no longer had the right to control the use of a certain office location and accordingly accounted for a lease modification for such facility, and also impaired and ceased using other leased office spaces.
Overview Samsara is on a mission to increase the safety, efficiency and sustainability of the operations that power the global economy. To realize this vision, we pioneered the Connected Operations Cloud, which allows businesses that depend on physical operations to harness IoT data to develop actionable business insights and improve their operations.
To realize this vision, we pioneered the Connected Operations Cloud, which is a system of record that enables businesses that depend on physical operations to harness Internet of Things (“IoT”) data to develop actionable business insights and improve their operations.
While we expect our sales and marketing expenses to decrease as a percentage of our revenue over the long term, our sales and marketing expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses. 70 Table of Contents General and Administrative General and administrative expenses consist of employee-related costs for executive, finance, legal, human resources, IT, and facilities personnel, including salaries, employee benefits and stock-based compensation, professional fees for external legal, accounting, recruiting and other consulting services, bad debt, allocated overhead costs and unallocated lease costs associated with unused office facilities.
General and Administrative General and administrative expenses consist of employee-related costs for executive, finance, legal, human resources, IT, and facilities personnel, including salaries, employee benefits and stock-based compensation, professional fees for external legal, accounting, recruiting and other consulting services, bad debt, allocated overhead costs, and unallocated lease costs associated with unused office facilities.
Research and Development Research and development expense is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 29, 2022 January 30, 2021 Amount % Research and development $ 205,125 $ 99,738 $ 105,387 106 % Percentage of revenue 48 % 40 % Research and development expense increased by $105.4 million, or 106%, for the fiscal year ended January 29, 2022 compared to the fiscal year ended January 30, 2021, primarily due to a $100.7 million increase in employee-related costs, which included a $84.5 million increase in stock-based compensation expense primarily attributable to the vesting of RSUs upon satisfaction of the performance condition in connection with our IPO in December 2021 and a $16.2 million increase in salaries and benefits driven by average headcount growth.
Research and Development Research and development expense is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 28, 2023 January 29, 2022 Amount % Research and development $ 187,405 $ 205,125 $ (17,720) (9 %) Percentage of revenue 29 % 48 % Research and development expense decreased by $17.7 million, or 9%, for the fiscal year ended January 28, 2023 compared to the fiscal year ended January 29, 2022, primarily due to a $23.2 million decrease in employee-related costs, which included a $35.5 million decrease in stock-based compensation expense, partially offset by a $12.4 million increase in salaries and benefits driven primarily by increased headcount to support our research and development organization.
Sales and Marketing Sales and marketing expenses consist primarily of employee-related costs directly associated with our sales and marketing activities, including salaries, employee benefits and stock-based compensation, and sales commissions. Sales and marketing expenses also include expenditures related to advertising, media, marketing, promotional costs, free trial expenses, brand awareness activities, business development, corporate partnerships and allocated overhead costs.
Sales and Marketing Sales and marketing expenses consist primarily of employee-related costs directly associated with our sales and marketing activities, including salaries, employee benefits and stock-based compensation, and sales commissions.
Determining the period of benefit requires judgment for which we take into consideration the expected life of the connected device, the connected device’s warranty period, past experience with customers, the duration of our relationships with our customers, and other available information. 80 Table of Contents Deferred Commissions Sales commissions paid to our sales force and the related payroll taxes, as well as commissions paid to referral partners, are considered incremental and recoverable costs of obtaining a contract with a customer.
These contract fulfillment costs are amortized over a period of benefit of five years. Determining the period of benefit requires judgment for which we take into consideration the expected life of the connected device, the connected device’s warranty period, past experience with customers, the duration of our relationships with our customers, and other available information.
Our dollar-based net retention rate fluctuates from period to period, including due to customer mergers, acquisitions, consolidations, spin-offs, and other market activity. While our Connected Operations Cloud is accessible to customers of all sizes and we have achieved rapid adoption over time, we are particularly focused on larger customers representing over $100,000 in ARR.
While our Connected Operations Cloud is accessible to customers of all sizes and we have achieved rapid adoption over time, we are particularly focused on larger customers representing over $100,000 in ARR. As of January 28, 2023, approximately 48% of our ARR came from customers representing over $100,000 in ARR.
General and Administrative General and administrative expense is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 29, 2022 January 30, 2021 Amount % General and administrative $ 159,843 $ 75,223 $ 84,620 112 % Percentage of revenue 38 % 30 % General and administrative expense increased by $84.6 million, or 112%, for the fiscal year ended January 29, 2022 compared to the fiscal year ended January 30, 2021, primarily due to a $77.9 million increase in employee-related costs, which included a $60.1 million increase in stock-based compensation expense primarily attributable to the vesting of RSUs upon satisfaction of the performance condition in connection with our IPO in December 2021 and a $17.8 million increase in salaries and benefits driven by an increase in average headcount to support the growth of our finance, accounting, human resources, IT, and legal functions in advance of our public offering.
General and Administrative General and administrative expense is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 28, 2023 January 29, 2022 Amount % General and administrative $ 170,785 $ 159,843 $ 10,942 7 % Percentage of revenue 26 % 38 % General and administrative expense increased by $10.9 million, or 7%, for the fiscal year ended January 28, 2023 compared to the fiscal year ended January 29, 2022, primarily due to a $6.7 million increase in expenses attributable to increased insurance expenses and other corporate expenses to support the normal course of operating as a public company, a $5.7 million increase in expenses relating to legal fees and professional services, and a $2.3 million increase in employee-related costs, which included a $14.8 million increase in salaries and benefits and related employer taxes primarily driven by an increase in headcount to support the growth of our finance, accounting, human resources, IT, and legal functions, partially offset by a $12.4 million decrease in stock-based compensation expense.
Cash and cash equivalents consisted of cash on deposit with banks as well as highly liquid investments with an original maturity of three months or less, when purchased.
Cash and cash equivalents consisted of cash on deposit with banks as well as highly liquid investments with an original maturity of 90 days or less, when purchased. Our investments primarily consisted of U.S. government and agency securities, corporate notes and bonds, commercial paper, and money market funds.
Our ability to expand within our customer base will depend on a number of factors, including our customers’ satisfaction, pricing, competition, and changes in our customers’ spending levels. We focus on maximizing the lifetime value of our customer relationships, and we continue to make significant investments in order to grow our customer base.
Our ability to expand within our customer base will depend on a number of factors, including our customers’ satisfaction, pricing, competition, macroeconomic factors, and changes in our customers’ spending levels. Investments in Innovation and Future Growth Our performance is driven by continuous innovation on our Connected Operations Cloud and our ability to scale our headcount to grow our business.
As of January 29, 2022, the dollar-based net retention rate for customers representing over $100,000 in ARR was over 125%, and approximately 45% of our ARR came from customers representing over $100,000 in ARR. 66 Table of Contents Key Business Metrics ARR We believe that ARR is a key indicator of the trajectory of our business performance, enables measurement of the progress of our business initiatives, and serves as an indicator of future growth.
Key Business Metrics The following table shows a summary of our key business metrics as of the periods presented (dollars in thousands): As of January 28, 2023 January 29, 2022 January 30, 2021 ARR $ 795,053 $ 558,113 $ 341,198 Customers > $100,000 ARR 1,237 806 452 62 Table of Contents ARR We believe that ARR is a key indicator of the trajectory of our business performance, enables measurement of the progress of our business initiatives, and serves as an indicator of future growth.
Our increase in research and development expense was also driven by a $4.4 million increase in expense associated with product initiatives. 73 Table of Contents Sales and Marketing Sales and marketing expense is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 29, 2022 January 30, 2021 Amount % Sales and marketing $ 291,209 $ 202,262 $ 88,947 44 % Percentage of revenue 68 % 81 % Sales and marketing expense increased by $88.9 million, or 44%, for the fiscal year ended January 29, 2022 compared to the fiscal year ended January 30, 2021, primarily due to a $84.3 million increase in employee-related costs, which included a $52.5 million increase in stock-based compensation expense primarily attributable to the vesting of RSUs upon satisfaction of the performance condition in connection with our IPO in December 2021, a $19.9 million increase in salaries and benefits primarily due to the timing of hiring to support our sales organization, and a $11.9 million increase in sales commissions.
These decreases in research and development expense were partially offset by a $4.0 million increase in third-party cloud infrastructure costs to support research and development activities, a $3.2 million increase in allocated overhead costs primarily due to software subscriptions and allocated rent, a $1.9 million increase in expenses relating to professional services, and a $1.3 million increase in travel-related expenses. 66 Table of Contents Sales and Marketing Sales and marketing expense is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change January 28, 2023 January 29, 2022 Amount % Sales and marketing $ 370,098 $ 291,209 $ 78,889 27 % Percentage of revenue 57 % 68 % Sales and marketing expense increased by $78.9 million, or 27%, for the fiscal year ended January 28, 2023 compared to the fiscal year ended January 29, 2022, primarily due to an $51.8 million increase in employee-related costs, which included a $52.4 million increase in salaries and benefits and related employer taxes primarily driven by an increase in headcount to support our sales organization and a $5.7 million increase in sales commissions, partially offset by a $6.4 million decrease in stock-based compensation expense.
As our customers expand and increase the use of our Connected Operations Cloud driven by increased IoT devices and additional Applications, we expect that our cost of revenue will increase on an absolute basis due to higher IoT device, cellular-related, and cloud hosting costs.
As our customers expand and increase the use of our Connected Operations Cloud driven by additional IoT devices and Applications, we expect our cost of revenue as a percentage of revenue to remain relatively flat from year to year and may also vary from quarter to quarter as a percentage of our revenue due to the timing and extent of these expenses.
JOBS Act Accounting Election We meet the definition of an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), which permits us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
JOBS Act Accounting Election Section 107 of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) permits an emerging growth company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. 73 Table of Contents Based on the aggregate worldwide market value of our voting and non-voting common equity securities held by non-affiliates on the last business day of our second fiscal quarter ended July 30, 2022, we ceased to be an emerging growth company as of January 28, 2023.
Interest Income and Other Income (Expense), Net Interest income and other income (expense), net consists primarily of income earned on our money market funds included in cash and cash equivalents and restricted cash, as well as foreign currency remeasurement gains and losses and foreign currency transaction gains and losses.
Interest Income and Other Income (Expense), Net Interest income and other income (expense), net consists primarily of income earned on our money market funds included in cash and cash equivalents, restricted cash, and our short-term and long-term investments, including amortization of premiums and accretion of discounts related to our marketable debt securities, net of associated fees.
Our increase in sales and marketing expense was also driven by a $5.1 million increase in expenses relating to lead generation.
Our increase in sales and marketing expense was also driven by a $10.6 million increase in travel-related expenses and expenses relating to our customer visits, conferences, and events, a $7.1 million increase in allocated overhead costs primarily due to allocated rent and software subscriptions, a $4.7 million increase in expenses relating to professional services, and a $1.3 million increase in expenses relating to lead generation initiatives.
Cash provided by financing activities was $402.0 million for the fiscal year ended January 30, 2021, which primarily consisted of $399.8 million of net proceeds from the issuance of convertible preferred stock and $2.4 million of proceeds from exercises of stock options.
Financing Activities Cash provided by financing activities was $14.2 million for the fiscal year ended January 28, 2023, which primarily consisted of $18.0 million of proceeds from employee stock purchase plan purchases and exercises of stock options, partially offset by $2.5 million in payments of offering costs and $1.3 million in payments of principal on finance leases.
Our performance is also impacted by our ability to scale our headcount across our business to support our growth. We have increased our headcount from 1,249 employees as of the last business day of the fiscal year ended January 30, 2021 to 1,616 employees as of the last business day of the fiscal year ended January 29, 2022.
We have increased our headcount from 1,616 employees as of the last business day of the fiscal year ended January 29, 2022 to 2,266 employees as of the last business day of the fiscal year ended January 28, 2023. We remain committed to investing in our sales capacity and our research and development organization, and to driving revenue growth globally.
Our industry-agnostic approach and the horizontal applicability of our solution have enabled us to deploy our platform to a diverse set of industries, illustrated by the chart below, which depicts the percentage of ARR by industry as of January 29, 2022 2 : 2 Listed industry data is available for Samsara customers comprising ~80% of ARR.
Our industry-agnostic approach and the horizontal applicability of our solution have enabled us to deploy our platform to a diverse set of industries. We have extended our Applications over time to address the needs of our customers.
This consisted of a net loss of $210.2 million, adjusted for non-cash charges of $53.1 million, and changes in our operating assets and liabilities of $14.6 million. The non-cash charges were primarily comprised of stock-based compensation expense of $25.6 million, depreciation and amortization of $10.7 million, operating lease-costs of $6.4 million, and bad debt expense of $9.4 million.
The non-cash charges were primarily comprised of stock-based compensation expense of $177.5 million, depreciation and amortization of $11.8 million, bad debt expense of $6.6 million, and lease modification, impairment, and related charges of $1.1 million, partially offset by net accretion of discounts on marketable debt securities of $4.4 million.
Our increase in general and administrative expense was also driven by a $5.1 million increase in expenses relating to outside services primarily related to external recruiting, accounting and other professional services fees to support our growth and public offering activities.
Our increase in general and administrative expense was also driven by a $1.7 million increase in audit fees. These increases in general and administrative expense were partially offset by a $4.4 million decrease in allocated overhead costs primarily due to allocated rent and a $1.7 million decrease in recruiting fees.
For a discussion of our consolidated statement of operations data for the fiscal year ended February 1, 2020, see “Comparison of the Fiscal Years Ended February 1, 2020 and January 30, 2021” under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our final prospectus dated December 14, 2021 and filed with the SEC pursuant to Rule 424(b) under the Securities Act on December 15, 2021 (the “Final Prospectus”).
A discussion of our financial condition and results of operations and our liquidity and capital resources for fiscal year 2021, and year-to-year comparisons between fiscal years 2022 and 2021 can be found under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended January 29, 2022 included in Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on March 30, 2022, which information is incorporated herein by reference.
Our gross margin increased for the fiscal year ended January 29, 2022 compared to the prior fiscal year mainly due to efficiencies resulting from product optimizations, improved commercial strategies, and economies of scale achieved as a result of revenue growth.
The increases in amortization of deferred IoT device costs and infrastructure costs were driven by increased sales volume year-over-year. Our gross margin increased to 72% for the fiscal year ended January 28, 2023 compared to 71% for the fiscal year ended January 29, 2022, mainly due to operational efficiencies in infrastructure costs.
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For a discussion of our liquidity and capital resources for the fiscal year ended February 1, 2020, see “Liquidity and Capital Resources” under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Final Prospectus.
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Overview Samsara is on a mission to increase the safety, efficiency and sustainability of the operations that power the global economy.
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We estimate that for the last three fiscal years, the calculated lifetime value of our customers has exceeded eight times the associated cost of acquiring them.
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Macroeconomic Trends Unfavorable conditions in the economy, both in the United States and abroad, may negatively affect the growth of our business and our results of operations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of January 29, 2022, we do not believe a hypothetical 10% increase or decrease in interest rates during any of the periods presented would have had a material impact on our consolidated financial statements. Foreign Currency Exchange Risk Our reporting currency and the functional currency of our wholly owned foreign subsidiaries is the U.S. dollar.
Biggest changeA hypothetical 100 basis point increase or decrease in interest rates would have resulted in a decrease or an increase of $3.4 million in the market value of our cash equivalents, and short-term and long-term investments as of January 28, 2023. Foreign Currency Exchange Risk Our reporting currency is the U.S. dollar.
We do not believe that a hypothetical 10% increase or decrease in the relative value of the U.S. dollar to other currencies during any of the periods presented would have had a material impact on our consolidated financial statements. 82 Table of Contents
We do not believe that a hypothetical 10% increase or decrease in the relative value of the U.S. dollar to other currencies during any of the periods presented would have had a material impact on our consolidated financial statements. Inflation Risk We do not believe that inflation has had a material impact on our consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in connection with our business, which primarily relate to fluctuations in interest rates and foreign exchange risks. Interest Rate Risk As of January 29, 2022, we had $921.2 million of cash and cash equivalents.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in connection with our business, which primarily relate to fluctuations in interest rates and foreign exchange and inflation risks.
A substantial majority of our sales are denominated in U.S. dollars, and therefore our revenue is not currently subject to significant foreign currency risk. Our operating expenses are denominated in the currencies of the countries in which our operations are located, which are primarily in the United States and the United Kingdom.
The functional currency of our wholly owned foreign subsidiaries is the U.S. dollar or the Mexican peso. A substantial majority of our sales are denominated in U.S. dollars, and therefore our revenue is not currently subject to significant foreign currency risk.
In addition, we had $23.1 million of restricted cash primarily due to outstanding letters of credit. Our cash and cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes.
Our cash, cash equivalents, and short-term and long-term investments are held for working capital purposes. We do not enter into investments for trading or speculative purposes. Our cash equivalents and our portfolio of marketable debt securities are subject to market risk due to changes in interest rates.
Added
Interest Rate Risk As of January 28, 2023, we had $803.0 million of cash, cash equivalents, and short-term and long-term investments in a variety of marketable debt securities, including U.S. government and agency securities, corporate notes and bonds, commercial paper, and money market funds. In addition, we had $23.1 million of restricted cash primarily due to outstanding letters of credit.
Added
Our operating expenses are denominated in the currencies of the countries in which our operations are located, which are primarily in the United States and the United Kingdom.
Added
If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could have a material impact on our consolidated financial statements. 74 Table of Contents

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