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What changed in Samsara Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Samsara Inc.'s 2023 and 2024 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 2024 report.

+545 added−501 removedSource: 10-K (2024-03-26) vs 10-K (2023-03-21)

Top changes in Samsara Inc.'s 2024 10-K

545 paragraphs added · 501 removed · 450 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

92 edited+26 added−12 removed80 unchanged
Biggest changeAs 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.
Biggest changeWe 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. 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.
Commercial vehicle fleets are the backbone of physical operations and are required to deliver and transport services, goods, and people in industries including transportation, wholesale and retail trade, construction, field services, logistics, utilities and energy, government, healthcare and education, manufacturing, food and beverage, and others.
Commercial vehicle fleets are the backbone of physical operations and are required to deliver and transport services, goods, and people in industries including transportation, construction, wholesale and retail trade, field services, logistics, utilities and energy, manufacturing, government, healthcare and education, food and beverage, and others.
We make available on our website, free of charge, copies of these reports and other information as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We make copies of these reports and other information available on our website, free of charge, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Except as expressly set forth in this Annual Report on Form 10-K, the contents of our websites are not incorporated by reference into, or otherwise to be regarded as part of, this report or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
Except as expressly set forth in this Annual Report on Form 10-K, the contents of our websites are not incorporated by reference into, or otherwise to be regarded as part of, this report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
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.
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 enable live-stream video to conduct “virtual ride-alongs,” enabling hands-on real-time coaching from anywhere. • AI-Based Computer Vision.
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 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 partners enables greater scale and flexibility at lower costs than establishing our own manufacturing facilities.
Our EV suite provides real-time charging station status and alerts, route planning, and usage reporting to increase the efficiency of electric fleets. We also provide electrification suitability recommendations to support fleets in the process of electrification. • OEM Telematics Integrations . Increasingly, vehicles include built-in cellular connectivity and upload data to clouds operated by OEMs.
Our EV suite provides real-time charging status and alerts, route planning, and usage reporting to increase the efficiency of electric fleets. We also provide electrification suitability recommendations to support fleets in the process of electrification. • OEM Telematics Integrations . Increasingly, vehicles include built-in cellular connectivity and upload data to clouds operated by OEMs.
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.
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 a central hub for a robust ecosystem of partner connections.
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.
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. 18 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.
Our fuel management tools track fuel use and report on vehicle and driver behavior. Companies can reduce fuel consumption by identifying wasteful driver behaviors, such as engine idling, speeding, and unnecessary acceleration, as well as report and maintain International Fuel Tax Agreement compliance. • Electric Vehicles.
Our fuel management tools track fuel use and report on vehicle and driver behavior. Companies can reduce fuel consumption by identifying wasteful driver behaviors, such as engine idling, speeding, and unnecessary acceleration, as well as report and maintain International Fuel Tax Agreement compliance. • Electric Vehicle Management.
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.
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 insights and improve their operations.
Through rigorous coverage testing and configurations for bandwidth efficiency, we are able to reliably capture data even in remote locations within the United States with poor connectivity.
Through rigorous coverage testing and configurations for bandwidth efficiency, we are able to reliably capture data even in remote locations within the continental United States with poor connectivity.
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.
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 software applications whose feature set is effective, extensible, and evolving; • Rapid development cycle; • 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; 17 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.
Our ability to capture, aggregate, and analyze IoT data is our key differentiator. This allows us to turn IoT data into actionable business insights, which deliver significant value to our customers.
Our ability to capture, aggregate, and analyze IoT data is our key differentiator. This allows us to turn IoT data into actionable insights, which deliver significant value to our 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.
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 solution to customers.
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.
Our differentiated, purpose-built suite of Applications 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.
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.
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, Mobile Apps and Workflows, Equipment Monitoring, and Site Visibility.
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.
However, some of our existing or potential 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.
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.
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 Enterprise-Grade Physical Operations.
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.
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 can be captured in the cloud for personalized driver coaching. • Scoring and Reporting.
As more customers adopt our solution, we collect more data from a more diverse set of physical assets and software applications, thereby improving our machine learning models and generating better operational insights that make our Connected Operations Cloud more attractive to customers. Customers typically adopt our solution to automate business processes and improve efficiencies throughout their organizations.
As more customers adopt our solution, we collect more data from a more diverse set of physical assets and third-party software applications, thereby improving our machine learning models and generating better operational insights that make our Connected Operations Cloud more attractive to customers. Customers typically adopt our solution to automate business processes and improve efficiencies throughout their organizations.
In addition to these integration partners, we work with a network of system integrators, consultants, and implementation partners in our Experts Marketplace. We are seeing strong adoption by customers integrating into our system, with our largest customers using on average more than six API integrations.
In addition to these integration partners, we work with a network of system integrators, consultants, and implementation partners in our Experts Marketplace. We are seeing strong adoption by customers integrating into our system, with our largest customers using on average six or more API integrations.
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.
We estimate that these industries represented over 40% of the global GDP in 2023. 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.
State-of-Art IoT Device Design Our Connected Operations Cloud is open and flexible, ingesting and synthesizing data from IoT and connected assets, whether they are from the customer or provided by Samsara. Our IoT devices are designed for ease of installation, affordability, reliability, and connectivity.
State-of-Art IoT Device Design Our Connected Operations Cloud is open and flexible, ingesting and synthesizing data from IoT and connected assets, whether they are from the customer or provided by Samsara. Our IoT devices are designed for ease of installation, value, reliability, and connectivity.
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.
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, UK 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 harnessing recent advancements in IoT connectivity, artificial intelligence (“AI”), cloud computing and video imagery, we are enabling the digital transformation of physical operations. Using our Connected Operations Cloud, customers can visualize their physical operations in real-time, on one integrated platform in a way that would have been impossible and impractical only a few years ago.
By harnessing recent advancements in IoT connectivity, artificial intelligence (“AI”), cloud computing, and video imagery, we are enabling the digital transformation of physical operations. Using our Connected Operations Cloud, customers can access their physical operations data in real-time, on one integrated platform in a way that would have been impossible and impractical only a few years ago.
We announce material information to the public about us, our products, and other matters through a variety of means, including filings with the SEC, press releases, public conference calls, webcasts, our investor relations website and our corporate blog (www.samsara.com/blog) in order to achieve broad, non-exclusionary distribution of information to the public and for complying with our disclosure obligations under Regulation FD.
We announce material information to the public about us, our products, and other matters through a variety of means, including filings with the SEC, press releases, public conference calls, webcasts, our investor relations website, our corporate website (www.samsara.com), and our corporate blog (www.samsara.com/blog) in order to achieve broad, non-exclusionary distribution of information to the public and to comply with our disclosure obligations under Regulation FD.
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.
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 fleet downtime and lower costs. • Fuel Management.
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
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 review the information disclosed through such channels. 19 Table of Contents
This operational and IT data is ingested into our Data Platform, where it is aggregated, enriched, and analyzed using embedded functionality for AI, workflows and analytics, alerts, API connections, and data security and privacy. Our Data Platform powers our Applications, which include solutions for Video-Based Safety, Vehicle Telematics, Apps and Driver Workflows, Equipment Monitoring, and Site Visibility.
This operational and IT data is ingested into our Data Platform, where it is aggregated, enriched, and analyzed using embedded functionality for AI, workflows and analytics, alerts, API connections, and data security and privacy. Our Data Platform powers our Applications, which include Video-Based Safety, Vehicle Telematics, Mobile Apps and Workflows, Equipment Monitoring, and Site Visibility.
We provide customers with customizable privacy control measures, features, and tools to help them meet the specific privacy requirements, standards, and applicable jurisdiction-specific legislation they may be subject to (including the GDPR, UKDPA, and CCPA, as amended by the California Privacy Rights Act of 2020 (“CPRA”)).
We provide customers with customizable privacy control measures, features, and tools to help them meet specific privacy requirements, standards, and applicable jurisdiction-specific legislation they may be subject to (including, for example, the GDPR, UK GDPR, UKDPA, and CCPA, as amended by the California Privacy Rights Act of 2020 (“CPRA”)).
Customers can create employee rewards programs based on driver data, measure changes to fleet performance with fleet-level reporting, and compare their fleet performance against industry benchmarks. • Coaching Workflows. Our coaching solution provides video-centric software workflows to customers, enabling them to systematically coach drivers and monitor coaching effectiveness.
Customers can create safety rewards programs based on driver data, measure changes to fleet performance with fleet-level reporting, and compare their fleet performance against industry benchmarks. • Coaching Workflows. Our virtual coaching solution provides video-centric software workflows to customers, enabling them to systematically coach drivers and monitor coaching effectiveness.
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.
Feedback from our customers, who wanted to leverage our solution more broadly across their operations, drove our investment into these expansion Applications. 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.
Businesses in industries like transportation, wholesale and retail trade, construction, field services, logistics, utilities and energy, government, healthcare and education, manufacturing, food and beverage, and others are the backbone of the global economy. They operate high-value assets, coordinate large field workforces, manage complex logistics and distributed sites, and face environmental, safety and other regulatory requirements.
Organizations across industries in transportation, wholesale and retail trade, construction, field services, logistics, utilities and energy, manufacturing, government, healthcare and education, food and beverage, and others are the backbone of the global economy. They operate high-value assets, coordinate large field workforces, manage complex logistics and distributed sites, and face environmental, safety and other regulatory requirements.
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.
With Samsara, organizations have a central system of record for physical operations, 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.
This single pane of glass is designed to deliver deep insight into a customer’s end-to-end physical operations. 9 Table of Contents • Extensible Technology Platform. Our Connected Operations Cloud is fully integrated to securely access and manage multiple Applications for physical operations.
This single pane of glass is designed to deliver deep insight into a customer’s end-to-end physical operations. • Extensible Technology Platform. Our Connected Operations Cloud is fully integrated to securely access and manage multiple Applications for physical operations.
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.
Further, we have established referral programs with some of our insurance and other partners, which act as an additional lead generation source. 16 Table of Contents Partners We have built a robust ecosystem that includes over 270 integration partners in our Samsara App Marketplace, powered by an active developer community.
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, which is registered with the Federal Motor Carrier Safety Administration (“FMCSA”) and certified with Transport Canada, 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.
Over time, we believe that we have a significant opportunity to increase our revenue across global markets. Our Applications Our Connected Operations Cloud includes an extensive AI-powered Data Platform that brings real-time visibility, analytics, and insights to our customers’ physical operations.
Over time, we believe that we have a significant opportunity to increase our revenue across global markets. 12 Table of Contents Our Applications Our Connected Operations Cloud includes an extensive AI-powered Data Platform that brings real-time visibility, analytics, and insights to our customers’ physical operations.
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.
The result is more efficient use of time and resources, and the ability to make real-time decisions. For example, our routing and dispatching features enable our customers to save on fuel consumption by identifying more efficient routes using real-time data on road conditions and delivery delays.
For smaller projects, we have a self-service model driven by a seamless web store experience. Our go-to-market and sales efforts are strengthened by our free-trial sales model. Prospective customers are invited to test our Connected Operations Cloud for their use case during a trial period at no cost.
For smaller customers, add-ons, expansions, and renewals, we have a self-service model driven by a seamless web store experience. Our go-to-market and sales efforts are strengthened by our free-trial sales model. Prospective customers are invited to test our Connected Operations Cloud for their use case during a trial period at no cost.
We file electronically with the Securities and Exchange Commission (“SEC”) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.
We electronically file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act with the SEC.
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.
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 feature in the dashboard that allows customers 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.
Using our apps, businesses are able to digitize documents, exchange key real-time messages, and manage driver workflows. Additionally, drivers and the back-office are able to streamline compliance workflows to meet stringent regulatory requirements. With proactive alerting to key stakeholders, our customers can reduce compliance risk and violations.
Using our apps, businesses are able to digitize documents, exchange key real-time messages, and manage employee workflows. Additionally, frontline workers and the back-office are able to streamline compliance workflows to meet stringent regulatory requirements. With proactive alerting to key stakeholders, our customers can reduce compliance risk and violations.
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.
Our Data Platform also empowers developers via an open API and provides enhanced privacy and security features that are tailored to our Applications. 6 Table of Contents Our customers range from small and medium-sized businesses to state and local governments and large, global enterprises with the most complex operations involving tens of thousands of physical assets.
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.
We believe that we are well positioned to capitalize on the ongoing rollout of 5G and the capabilities that a more robust network can provide, particularly in leveraging AI and video.
In fiscal year 2023, our Data Platform collected approximately six trillion data points, including video footage, people and motion detection, GPS location, energy consumption, asset utilization, compliance logs, accelerometer and gyroscope data, and engine diagnostics. This immense data set powers our AI and provides our customers with valuable insights that improve the safety, efficiency, and sustainability of their operations.
In fiscal year 2024, our Data Platform processed over nine trillion data points, including video footage, people and motion detection, GPS location, energy consumption, asset utilization, compliance logs, accelerometer and gyroscope data, and engine diagnostics. This immense data set powers our AI and provides our customers with valuable insights that improve the safety, efficiency, and sustainability of their operations.
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 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 certain Applications without needing to install an aftermarket IoT device in their vehicle. 13 Table of Contents Mobile Apps and Workflows • Mobile Workflows.
We are seeing strong adoption of integrations on our platform, with our largest customers using on average six or more API integrations, up from four API integrations a year ago. Sales and Marketing We primarily sell subscriptions to our Connected Operations Cloud to large, medium-sized, and small businesses through a direct sales motion.
We are seeing strong adoption of integrations on our platform, with our largest customers using on average six or more API integrations. Sales and Marketing We primarily sell subscriptions to our Connected Operations Cloud to large, medium-sized, and small businesses through direct sales.
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 values are: • Focus on customer success . 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.
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 ecosystem includes over 270 third-party integrations in the Samsara App Marketplace, a portal through which customers can access those integrations to connect Samsara to other systems. Our Experts Marketplace features a network of certified system integrators, consultants, and implementation partners who provide services to our customers.
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 do this by incorporating edge computing capabilities into our solution for the unique requirements of enterprise-grade physical operations. For example, we ingest video footage and can immediately analyze relevant data on our IoT devices to coach drivers or security operators about tailgating, safety hazards, unsafe work environments and distracted driving in real-time.
We create an environment where people can bring their whole, authentic selves to work and that reflects the diversity of the world we are helping to improve. • Win as a team . We win together, celebrate together, and support each other. We all operate with trust and respect, and are excited to build and contribute to Samsara’s community.
We create an environment where people can bring their whole, authentic selves to work and that reflects the diversity of the world we are helping to improve. • Win as a team . We win together, celebrate together, and support each other.
We also include terms pursuant to the CCPA, as amended by the CPRA (together with its implementing regulations), in our contractual terms. We also maintain a self-certification under the EU-U.S. and Swiss-U.S. Privacy Shield programs.
We also include terms pursuant to the CCPA, as amended by the CPRA (together with its implementing regulations), in our contractual terms. We also maintained a self-certification under the EU-U.S. and Swiss-U.S. Privacy Shield programs, and transitioned automatically to the EU-U.S. Data Privacy Framework and the Swiss-U.S. Data Privacy Frameworks, along with a UK Extension to the EU-U.S.
In today’s rapidly evolving technology environment, our multi-tenant SaaS platform gives us the agility to rapidly introduce new feature enhancements and the capacity to surface critical performance data based on our customers’ own preferences and analytical needs.
Our Technology A Modern, Scalable Platform Our Connected Operations Cloud is purpose-built to scale and leverage modern technology. In today’s rapidly evolving technology environment, our multi-tenant SaaS platform gives us the agility to rapidly introduce new feature enhancements and the capacity to surface critical performance data based on our customers’ own preferences and analytical needs.
Our simple user experience and clean user interface make it easy for users to get up and running on Samsara, from back-office administrative teams to field workers and drivers. Once implemented, we make it easy for customers to add new Applications. • Innovation Flywheel. We constantly innovate to improve our customers’ operations.
Our simple user experience and clean user interface make it easy for users to get up and running on Samsara, from back-office administrative teams to frontline workers and drivers. Once implemented, we make it easy for customers to add new Applications. • Clear Return on Investment.
And we always win as a team. Feedback, both from customers and employees, is at the heart of our culture. Coupled with our performance-based approach to compensation, we have created a culture where employees are rewarded for impacting our business directly through their actions. We focus our people strategy on hiring, developing, and retaining diverse talent.
Coupled with our performance-based approach to compensation, we have created a culture where employees are rewarded for impacting our business directly through their actions. We focus our people strategy on hiring, developing, and retaining diverse talent.
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.
As of February 3, 2024, we had over 16,000 Core Customers, who are customers with subscriptions to our Connected Operations Cloud, each representing $10,000 or more in annual recurring revenue (“ARR”). 1 2 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.
Our Team and Culture Our culture is rooted in our values. Our values reflect what has always been core to who we are, and who we aspire to be as we drive our mission, build for the future, and grow our incredibly talented team. Our values are: • Focus on customer success .
Our culture is a competitive advantage; it helps us attract and retain talent. Our Team and Culture Our culture is rooted in our values. Our values reflect what has always been core to who we are, and who we aspire to be as we drive our mission, build for the future, and grow our incredibly talented team.
Ease of installation allows customers of all sizes and levels of sophistication to quickly bring their physical assets online, adopt our Connected Operations Cloud, and begin using our Applications that provide actionable insights with minimal required setup.
Our solution is typically self-installed and can be fully deployed and configured in as little as one hour. Ease of installation allows customers of all sizes and levels of sophistication to quickly bring their physical assets online, adopt our Connected Operations Cloud, and begin using our Applications that provide actionable insights with minimal required setup.
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.
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.
The use of edge computing in our IoT devices also allows critical data collection and processing to occur synchronously on a device without latency or in environments with low connectivity for real-time applications. • Ease of Use and Adoption. Our solution is typically self-installed and can be fully deployed and configured in as little as one hour.
The use of edge computing in our IoT devices also allows critical data collection and processing to occur synchronously on a device without latency or in environments with low connectivity for real-time applications. 10 Table of Contents • Ease of Use and Adoption.
We use industry standards and protocols to protect customer data, whether in transit (including TLS 1.2 and 256-bit AES encryption) or at rest in our hosted infrastructure (including FIPS 140-2 compliant encryption standards). Our security program is designed to identify and mitigate risks, and we constantly look to implement best practices and evaluate ways to improve our security.
We use industry standards and protocols to protect customer data, whether in transit (including TLS 1.2 and 256-bit AES encryption) or at rest in our hosted infrastructure (including FIPS 140-2 compliant encryption standards).
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.
This robust ecosystem of third-party integrations drives improved efficiency and insight for customers by unifying and analyzing data across multiple, previously siloed systems.
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.
Our customers can also customize and control privacy features to help meet their compliance requirements under laws and regulations such as the European Union (“EU”) General Data Protection Regulation (“GDPR”), UK General Data Protection Regulation (“UK GDPR”), and UK Data Protection Act (“UKDPA”) in Europe, as well as those in the United States such as the California Consumer Privacy Act (“CCPA”).
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. 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.
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.
We enable our customers to actively monitor safety issues by leveraging IoT data and AI to extract patterns and improve their safety programs. We capture and process many types of video footage, including harsh braking, distracted driving, harsh turning events, and people and motion alerts, which can be used to monitor and improve the safety of our customers’ physical operations.
We capture and process footage of many types of events, including harsh braking, distracted driving, harsh turning events, and people and motion alerts, which can be used to coach drivers and improve the safety of our customers’ physical operations.
Our differentiated company culture is a core driver of our success. We innovate quickly in partnership with our customers, we focus on durable, long-term solutions, and we’ve built a curious and collaborative employee community that wins as a team. Our culture is a competitive advantage; it helps us attract and retain talent.
Our differentiated company culture is a critical driver of our success. We place our customers at the core of our mission and we are passionate about every detail of their experience. We innovate quickly in partnership with our customers, we focus on durable, long-term solutions, and we’ve built a curious and collaborative employee community that wins as a team.
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.
A key focus of our company is to continue to expand our global reach. In May 2018, we established our first international office in England. In fiscal year 2024, we continued to expand our international footprint, which now spans across the United States, Canada, Mexico, Taiwan, England, France, Germany, Poland, and the Benelux region.
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.
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.
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.
As of February 3, 2024, we had 1,848 customers, each representing over $100,000 in ARR. We believe there is significant room for growth in our target customer base. Unlike retail, advertising, media, and information technology (“IT”), which have already undergone digital transformation, industries with physical operations are still in the early stages of digital adoption.
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.
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. App Marketplace and APIs Samsara’s integration ecosystem includes over 270 pre-built integrations in our App Marketplace.
Our Site Visibility application brings advanced AI and cloud-based visibility to IP security camera systems. Customers can leverage our AI detection to identify workplace hazards and operational inefficiencies, in addition to responding to unusual activity.
Our Site Visibility application brings advanced AI and cloud-based visibility to onsite locations such as job sites or warehouses by integrating with third-party cameras. Customers can leverage our AI detection to identify workplace hazards and operational inefficiencies, in addition to responding to unusual activity.
By using this massive data set to train, test and fine-tune our machine learning models, we are able to provide actionable business insights to improve our customers’ operations. We maintain a close, collaborative relationship between our AI, firmware and software development teams to ensure our advanced AI toolset runs efficiently and performantly at the edge, where compute resources are limited.
We maintain a close, collaborative relationship between our AI, firmware, and software development teams to ensure our advanced AI toolset runs efficiently and performantly at the edge, where compute resources are limited.
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.
We use this input to update the privacy features of our Connected Operations Cloud, develop new features and Applications, and give our customers the tools they need to meet their data protection and privacy goals. 15 Table of Contents 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.
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.
This system allows for quick, behind-the-scenes querying of data at full granularity, and presents it to the user in real-time.
This reduces materials wasted and allows our customers to improve their throughput and yield. • Supports Efficient Regulatory Compliance. We enable our customers to more easily meet regulatory compliance obligations.
Similarly, our platform helps product manufacturers perform quality assurance in real-time to reduce wasted product by detecting production or quality issues. This reduces materials wasted and allows our customers to improve their throughput and yield. • Supports Efficient Regulatory Compliance. We enable our customers to more easily meet regulatory compliance obligations.
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. 7 Table of Contents Our Solution We are helping drive the digital transformation of physical operations by enabling organizations with fleets, equipment, job sites, and mobile employees to connect real-time data from their physical operations on one platform.
Our Solution We are helping drive the digital transformation of physical operations by enabling organizations with fleets, equipment, job sites, and frontline workers to connect real-time data from their physical operations on one platform.
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.
What Sets Us Apart • IoT Data Leader: A Network Effect. 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 2024, our Data Platform processed over nine trillion data points.
As of January 28, 2023, our portfolio consisted of 58 issued and eight allowed (issuance pending) patents in the United States. We also had 127 patent applications pending for examination in the United States and no non-U.S. patents or patent applications.
As of February 3, 2024, our portfolio consisted of 100 issued and eight allowed (issuance pending) patents in the United States. Our issued patents are scheduled to expire between 2035 and 2040. We also had 121 patent applications pending for examination in the United States and one non-U.S. patent application.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFactors that may cause fluctuations in our financial results and our business metrics include but are not limited to: • Our ability to attract new customers, particularly large customers; • Our ability to retain and expand our relationships with existing customers; • Our ability to successfully expand our business domestically and internationally; • Our ability to gain new channel partners and retain existing channel partners; • Our ability to attract, retain and develop key employees and other qualified personnel; • Fluctuations in the growth rate of the overall markets that our solution addresses; • Supply chain, freight and shipping costs; • Our ability to effectively manage our growth; • Fluctuations in the mix of our revenue; • The payment terms in our customer contracts; • The amount and timing of operating expenses related to the maintenance and expansion of our business and operations, including continued investments in sales and marketing, research and development and general and administrative resources; • Network outages or performance degradation of our cloud service; • Information security breaches and incidents; • General economic, industry and market conditions, including global supply chain challenges, foreign currency fluctuations, elevated inflation and interest rates and monetary policy changes, lower consumer confidence, and volatile equity markets; • Changes in law and regulations affecting our and our customers’ businesses or product requirements; • Increases or decreases in the number of subscriptions or pricing changes upon any renewals of customer agreements; • Changes in our pricing policies or those of our competitors; • The budgeting cycles and purchasing practices of customers; • Decisions by potential customers to return products purchased from us and/or purchase alternative solutions from other vendors; • Insolvency or credit difficulties confronting our customers, which could adversely affect their ability to purchase or pay for a subscription to use our solution; • The cost and potential outcomes of future litigation or other disputes; • Future accounting pronouncements or changes in our accounting policies; • Our overall effective tax rate, including impacts caused by any reorganization in our corporate tax structure and any new legislation or regulatory developments; 45 Table of Contents • Fluctuations in stock-based compensation expense, including the stock-based compensation expense that we will incur in connection with future RSU settlements; • Trade protection measures (such as tariffs and duties) and import or export licensing requirements; • Fluctuations in foreign currency exchange rates; • Fluctuations or impairments in the market values of our marketable debt securities portfolio or strategic investments, or in interest rates; • Our timing and success in introducing new features and Applications to the market, including integrations of our solution with additional third-party software, IoT devices and other connected assets; • The actions of our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or strategic partners; • The provision of fleet management solutions or asset management solutions from cellular carrier-controlled or OEM-controlled channels from which we may be excluded; • The impact of the Russia-Ukraine conflict, geopolitical tensions involving China, and related macroeconomic events on our and our customers’ and partners’ respective operations; • Our ability to successfully manage and realize the anticipated benefits of any future acquisitions of businesses, solutions, or technologies; • The timing of expenses related to the development or acquisition of businesses, solutions, or technologies and potential future charges for impairment of goodwill from acquired companies; and • Other risk factors described in this Annual Report on Form 10-K.
Biggest changeFactors that may cause fluctuations in our financial results and our business metrics include but are not limited to: • Our ability to attract new customers, particularly large customers; • Our ability to retain and expand our relationships with existing customers; • Our ability to successfully expand our business domestically and internationally; • Our ability to gain new channel partners and retain existing channel partners; • Our ability to attract, retain, and develop key employees and other qualified personnel; • Fluctuations in the growth rate of the overall markets that our solution addresses; • Supply chain, freight, and shipping costs; 48 Table of Contents • Our ability to effectively manage our growth; • The payment terms in our customer contracts; • The timing of payments to our vendors, suppliers, and other parties; • The amount and timing of operating expenses related to the maintenance and expansion of our business and operations, including continued investments in sales and marketing, research and development, and general and administrative resources; • Network outages or performance degradation of our cloud service; • Information security breaches and incidents; • General economic, industry and market conditions, including global supply chain challenges, foreign currency f luctuations, elevated inflation and interest rates and monetary policy changes, lower consumer confidence, and volatile equity markets; • Changes in law and regulations affecting our and our customers’ businesses or product requirements; • Seasonality in customer purchasing trends; • Increases or decrease s in the number of subscriptions or pricing changes upon any renewals of customer agreements; • Changes in the mix of revenue attributable to subscriptions versus hardware, professional services, or other non-subscription revenue; • Changes in our pricing policies or those of our competitors; • The budgeting cycles and purchasing practices of customers; • Decisions by potential customers to return products purchased from us and/or purchase alternative solutions from other vendors; • Insolvency or credit difficulties confronting our customers, which could adversely affect their ability to purchase or pay for a subscription to use our solution; • The cost and potential outcomes of future litigation or other disputes; • Future accounting pronouncements or changes in our accounting policies; • Our overall effective tax rate, including impacts caused by any reorganization in our corporate tax structure and any new legislation or regulatory developments; • Fluctuations in stock-based compensation expense, including the stock-based compensation expense that we will incur in connection with future RSU settlements; • Trade protection measures (such as tariffs and duties) and import or export licensing requirements; • Fluctuations in foreign currency exchange rates; • Fluctuations or impairments in the market values of our marketable debt securities portfolio or strategic investments, or in interest rates; • Our timing and success in introducing new features and Applications to the market, including integrations of our solution with additional third-party software, IoT devices, and other connected assets; • The actions of our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers, or strategic partners; • The provision of fleet management solutions or asset management solutions from cellular carrier-controlled or OEM-controlled channels from which we may be excluded; • The impact of the Russia-Ukraine conflict, the conflict in Israel and Gaza, geopolitical tensions involving China, and related macroeconomic events on our and our customers’ and partners’ respective operations; • Our ability to successfully manage and realize the anticipated benefits of any future acquisitions of businesses, solutions, or technologies; • The timing of expenses related to the development or acquisition of businesses, solutions, or technologies and potential future charges for impairment of goodwill from acquired companies; 49 Table of Contents • The length of a specific fiscal period; and • Other risk factors described in this Annual Report on Form 10-K.
While our strategy of building Applications for use in connection with customers’ fleets has proven successful in the past, it is uncertain we will achieve the same penetration and organic growth with respect to Applications for customers’ sites and equipment or any other use cases that we pursue.
While our strategy of building Applications for use in connection with customers’ fleets has proven successful in the past, it is uncertain that we will achieve the same penetration and organic growth with respect to Applications for customers’ sites and equipment or any other use cases that we pursue.
Our customers depend on our customer outcomes team to resolve issues and to realize the full benefits relating to our Connected Operations Cloud.
Our customers depend on our customer outcomes team to resolve issues and realize the full benefits relating to our Connected Operations Cloud.
We have been engaged in strategic initiatives to expand the scope of our core business to improve long-term stockholder value, to improve our cost structure and efficiency, and to increase our selling efforts and develop new business, and we expect to continue making significant expenditures in pursuit of these initiatives.
We have been engaged in strategic initiatives to expand the scope of our core business to increase long-term stockholder value, to improve our cost structure and efficiency, and to increase our selling efforts and develop new business, and we expect to continue making significant expenditures in pursuit of these initiatives.
We have experienced, and may in the future experience, disruptions, data loss, outages, and other performance problems with our solution and infrastructure due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints, or other security-related incidents.
We have experienced, and may in the future experience, disruptions, data loss, outages, and other performance problems with our solution and infrastructure due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints, or security-related incidents.
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.
The causes for such disruptions or failures could also include a major earthquake, blizzard, fire, cyber-attack, act of terrorism, or other catastrophic event, 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.
Not only must we ensure our IoT devices are compatible with applications and technologies developed by our partners and vendors, but we must also ensure that our IoT devices can interface with third-party hardware, software or infrastructure that our customers may choose to adopt.
Not only must we ensure our IoT devices are compatible with third-party software applications and technologies developed by our partners and vendors, but we must also ensure that our IoT devices can interface with third-party hardware, software, or infrastructure that our customers may choose to adopt.
Any limitation of liability, warranty disclaimers, or indemnity provisions that may be contained in these agreements may not be enforceable or adequate or effective, including as a result of existing or future applicable laws or unfavorable judicial decisions, and they may not function to limit our liability or otherwise protect against costs arising from defects or errors, regulatory enforcement, or otherwise.
Any limitation of liability, warranty disclaimers, or indemnity provisions that may be contained in these agreements may not be enforceable, adequate, or effective, including as a result of existing or future applicable laws or unfavorable judicial decisions, and they may not function to limit our liability or otherwise protect against costs arising from defects or errors, regulatory enforcement, or otherwise.
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, in the United States, fleet operators face numerous complex regulatory requirements, including, among others, electronic logging requirements; compliance, safety, and accountability driver safety scoring; limitations on HOS; and compliance and fuel tax reporting. If these regulatory requirements were reduced or eliminated, our Applications for the fleet use case would have reduced utility to our customers.
Some government entities have statutory, contractual, or other legal rights to terminate contracts with us for convenience, for lack of appropriation of funds, or due to a default, and any such termination may adversely affect our future results of operations.
Some government entities have statutory, contractual, or other legal rights to terminate contracts with us for convenience, for lack of appropriation of funds, due to a default, or due to other contractual rights, and any such termination may adversely affect our future results of operations.
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.
Under the Tax Cuts and Jobs Act of 2017, 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.
The stock market experiences extreme price and volume fluctuations from time to time. The market prices of securities of companies, particularly technology companies, have experienced fluctuations that often have been unrelated or disproportionate to their results of operations.
The stock market experiences extreme price and volume fluctuations from time to time. The market prices of securities of companies, particularly technology companies, have experienced fluctuations that have often been unrelated or disproportionate to their results of operations.
Because of the ten-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively control a majority of the combined voting power of our common stock and therefore are able to control all matters submitted to our stockholders for approval.
Because of the ten-to-one voting ratio between our Class B and Class A common stock, holders of our Class B common stock collectively control a majority of the combined voting power of our common stock and therefore are able to control all matters submitted to our stockholders for approval.
These industries include transportation, wholesale and retail trade, construction, field services, logistics, utilities and energy, government, healthcare and education, manufacturing, food and beverage, and others. Given the concentration of our business activities in these industries and their heightened susceptibility to disruption in times of economic uncertainty, we will be particularly exposed to certain economic uncertainty and downturns.
These industries include transportation, construction, wholesale and retail trade, field services, logistics, utilities and energy, government, healthcare and education, manufacturing, food and beverage, and others. Given the concentration of our business activities in these industries and their heightened susceptibility to disruption in times of economic uncertainty, we will be particularly exposed to certain economic uncertainty and downturns.
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.
Such provisions include: • our amended and restated certificate of incorporation provides for a multi-class common stock structure, which provides our pre-IPO stockholders, including 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.
Our solution is often operated in large scale, distributed IT environments, including across a wide array of IoT devices and connected assets. Implementing our solutions in such environments can be a complex and lengthy process, particularly for certain of our customers who are less experienced with respect to the implementation of cloud-based platforms such as ours.
Our solution is often operated in large scale, distributed IT environments, including across a wide array of IoT devices and connected assets. Implementing our solution in such environments can be a complex and lengthy process, particularly for certain of our customers who are less experienced with respect to the implementation of cloud-based platforms such as ours.
Our inability to protect our intellectual property rights and proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our products, impair the functionality of our products, delay introductions of new products, result in our substituting inferior or more costly technologies into our products, or injure our brand and reputation.
Our inability to protect our intellectual property rights and proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our solution, impair the functionality of our solution, delay introductions of new products, result in our substituting inferior or more costly technologies into our solution, or injure our brand and reputation.
These laws and regulations may impose other added costs on our business, and failure to comply with these or other applicable regulations and requirements, including non-compliance in the past, could lead to claims for damages from our channel partners, penalties, and termination of contracts and suspension or debarment from government contracting for a period of time with government agencies.
These laws, regulations, and policies may impose other added costs on our business, and failure to comply with these or other applicable regulations and requirements, including non-compliance in the past, could lead to claims for damages from our channel partners, penalties, and termination of contracts and suspension or debarment from contracting with government agencies for a period of time.
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 of 2010, 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”); • 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.
Regulatory compliance and reporting is driven by legislation, regulatory requirements and related guidance, which are often subject to change, from regulatory authorities in nearly every jurisdiction globally. With respect to our Applications that are used for customers’ compliance purposes, changes in underlying regulations may reduce or eliminate our customers’ continued demand for Applications that address those regulations.
Regulatory compliance and reporting are driven by legislation, regulatory requirements, and related guidance, which are often subject to change, from regulatory authorities in nearly every jurisdiction globally. With respect to our Applications that are used for customers’ compliance purposes, changes in underlying regulations may reduce or eliminate our customers’ continued demand for Applications that address those regulations.
Any new application that we develop may not be introduced in a timely or cost-effective manner, may contain bugs or other defects, or may not achieve the market acceptance necessary to generate significant revenue. Further, the development of new Applications can be difficult, time-consuming and costly.
Any new application that we develop may not be introduced in a timely or cost-effective manner, may contain bugs or other defects, or may not achieve the market acceptance necessary to generate significant revenue. Further, the development and introduction of new Applications can be difficult, time-consuming, and costly.
As a result of actual or perceived noncompliance with government contracting laws, regulations, or contractual provisions, we may be subject to audits and internal investigations which may prove costly to our business financially, divert management time, or limit our ability to continue selling subscriptions to our solution to our government customers.
As a result of actual or perceived noncompliance with government contracting laws, regulations, policies, or contractual provisions, we may be subject to audits and internal investigations which may prove costly to our business financially, divert management time, or limit our ability to continue selling subscriptions to our solution to our government customers.
Our customers within the physical operations industry are particularly sensitive to the reliability of our products because a failure or defect in our solution could have a significant impact on their business or employees, including leading to death, serious bodily injury, or noncompliance with applicable regulations.
Our customers within the physical operations industry are particularly sensitive to the reliability of our solution because a failure or defect in our solution could have a significant impact on their business or employees, including leading to death, serious bodily injury, or noncompliance with applicable regulations.
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.
Many countries in the EU, as well as a number of other countries and organizations such as the Organisation for Economic Cooperation and Development (the “OECD”), are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business.
Other factors, many of which are out of our control, may now or in the future impact our ability to attract new customers, including: • potential customers’ inexperience with or reluctance to adopt software-and cloud-based solutions in their physical operations; • potential customers’ commitments to or preferences for their existing vendors; • actual or perceived switching costs; • the adoption of new, or the amendment of existing, laws, rules, or regulations that negatively impact the utility of, or that require difficult-to-implement changes to, our solution, including deregulation that reduces the need for compliance functionality provided by our Connected Operations Cloud; • our ability to deliver compliance functionality offered by our solution; • our failure to expand, retain, and motivate our sales, product and engineering personnel; • our failure to successfully expand into new international markets; • our failure to develop or expand relationships with existing channel or OEM partners or to attract new channel or OEM partners; • our failure to develop our application ecosystem and integrate with new applications and devices used by potential customers; • our failure to help potential customers successfully deploy and use our solution; and • general macroeconomic conditions, including elevated inflation and interest rates, financial distress caused by recent or potential bank failures and other recent financial, economic, and political events that may impact our customers and the industries in which they operate.
Other factors, many of which are out of our control, may now or in the future impact our ability to attract new customers, including: • potential customers’ inexperience with or reluctance to adopt software and cloud-based solutions in their physical operations; • potential customers’ commitments to or preferences for their existing vendors; • actual or perceived switching costs; • the adoption of new, or the amendment of existing, laws, rules, or regulations that negatively impact the utility of, or that require difficult-to-implement changes to, our solution, including deregulation that reduces the need for compliance functionality provided by our Connected Operations Cloud; • our ability to deliver compliance functionality offered by our solution; • our failure to expand, retain, and motivate our sales, product, and engineering personnel; • our failure to successfully expand into new international markets; • our failure to develop or expand relationships with existing channel or OEM partners or to attract new channel or OEM partners; • our failure to develop our application ecosystem and integrate with new third-party and customer software applications and devices used by potential customers; • our failure to help potential customers successfully deploy and use our solution; and • general macroeconomic conditions, including elevated inflation and interest rates, financial distress caused by bank failures and other recent financial, economic, and political events that may impact our customers and the industries in which they operate.
In addition, given the costs, effort, risks and downside of obtaining patent protection, including the requirement to ultimately disclose the invention to the public, we may choose not to seek patent protection for certain innovations; however, such patent protection could later on prove to be important to our business.
In addition, given the costs, effort, risks, and downside of obtaining patent protection, including the requirement to ultimately disclose the invention to the public, we may choose not to seek patent protection for certain innovations; however, such patent protection could later prove to be important to our business.
We anticipate that our operating expenses will increase substantially in the foreseeable future as we continue to enhance our Connected Operations Cloud, broaden our customer base, expand our sales and marketing activities, including expanding our sales team and customer outcomes team, expand our operations, hire additional employees, and continue to develop our technology.
We anticipate that our expenses will increase substantially in the foreseeable future as we continue to enhance our Connected Operations Cloud, broaden our customer base, expand our sales and marketing activities, including expanding our sales team and customer outcomes team, expand our operations, hire additional employees, and continue to develop our technology.
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.
If we do not maintain our prices and gross profits at levels that will allow us to achieve our profitability targets, our business, financial condition, and results of operations will be harmed. We recognize certain revenue streams over the term of our subscription contracts.
Being a public company and the aforementioned rules and regulations may make it more expensive for us to maintain director and officer liability insurance, and in the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.
Being a public company subject to the aforementioned rules and regulations may make it more expensive for us to maintain director and officer liability insurance, and in the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.
Our or our third-party partners’ systems and security measures may be breached or otherwise compromised or fail as a result of actions by malicious insiders or third parties (including nation-state actors, such as those acting in connection with ongoing geopolitical tensions), such as intentional misconduct by computer hackers, phishing (including by impersonating us through using domain names that are confusingly similar to ours) and other means of social engineering, including fraudulent inducement of employees or customers to disclose usernames, passwords, or other sensitive information, and employee error or malfeasance.
Our or our third-party partners’ systems and security measures may be breached, otherwise compromised, fail, or be disrupted as a result of actions by malicious insiders or third parties (including nation-state actors, such as those acting in connection with ongoing geopolitical tensions), such as intentional misconduct by computer hackers, phishing (including by impersonating us through using domain names that are confusingly similar to ours) and other means of social engineering, including fraudulent inducement of employees or customers to disclose usernames, passwords, or other sensitive information, and employee or contractor error or malfeasance.
Interruptions or performance problems with either our technology and infrastructure or our data center hosting facilities could, among other things: • result in the destruction or disruption of any of our critical business operations, controls, or procedures or information technology systems; • severely affect our ability to conduct normal business operations; • result in a material weakness in our internal control over financial reporting; • cause our customers to terminate their subscriptions; • result in our issuing credits or paying penalties or fines; • harm our brand and reputation; • adversely affect our renewal rates or our ability to attract new customers; or • cause our solution to be perceived as not being secure.
Interruptions or performance problems with either our technology and infrastructure or our data center hosting facilities could, among other things: • result in the destruction or disruption of any of our critical business operations, controls, or procedures or IT systems; • severely affect our ability to conduct normal business operations; • result in a material weakness in our internal control over financial reporting; • cause our customers to terminate their subscriptions; • result in our issuing credits or paying penalties or fines; • harm our brand and reputation; • adversely affect our renewal rates or our ability to attract new customers; or • cause our solution to be perceived as not being secure.
As part of our business, we process, store, and transmit our customers’ information and data as well as our own, including in our Data Platform, networks, and other systems, and we rely on third parties that are not directly under our control to do so as well.
As part of our business, we process, store, and transmit our customers’ information and data as well as our own, including in our Data Platform, networks, and other systems, and we also rely on third parties that are not directly under our control to do so.
Sales of substantial amounts of our Class A common stock in the public markets, or the perception that sales might occur, also could cause the trading price of our Class A common stock to decline and make it more difficult for you to sell shares of our Class A common stock.
Sales or distributions of substantial amounts of our Class A common stock in the public markets, or the perception that sales or distributions might occur, also could cause the trading price of our Class A common stock to decline and make it more difficult for you to sell shares of our Class A common stock.
As a government contractor, we must comply with laws, regulations, and contractual provisions relating to the formation, administration, and performance of government contracts and inclusion on government contract vehicles, which affect how we and our partners do business with government agencies.
As a government contractor, we must comply with laws, regulations, policies, and contractual provisions relating to the formation, administration, and performance of government contracts and inclusion on government contract vehicles, which affect how we and our partners do business with government agencies.
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.
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. 59 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 the future, one or more technology companies may choose not to support the interoperation of their hardware, software, or infrastructure with solutions such as ours, or our solutions may not otherwise support the capabilities needed to operate with such hardware, software, or infrastructure.
In the future, one or more technology companies may choose not to support the interoperation of their hardware, software, or infrastructure with solutions such as ours, or our solution may not otherwise support the capabilities needed to operate with such hardware, software, or infrastructure.
The loss of, or inability to obtain, certain third-party licenses or other rights or to obtain such licenses or rights on favorable terms, or the need to engage in litigation regarding these matters, could result in product roll-backs or delays in product releases until equivalent technology can be identified, licensed or developed, if at all, and integrated into our solutions, and it may have a material adverse effect on our business, financial condition, and results of operations.
The loss of, or inability to obtain, certain third-party licenses or other rights, the inability to obtain such licenses or rights on favorable terms, or the need to engage in litigation regarding these matters, could result in product roll-backs or delays in product releases until equivalent technology can be identified, licensed or developed, if at all, and integrated into our solution, and it may have a material adverse effect on our business, financial condition, and results of operations.
A number of factors influence the length and variability of our sales cycle, including the need to educate potential customers about the uses and benefits of our solution, the discretionary nature of purchasing and budget cycles, the competitive nature of evaluation and purchasing approval processes, the customer’s contemplated use case, the specific deployment plan of each customer, the complexity of the customer’s organization, and the difficulty of such deployment, as well as whether a sale is made directly by us or through resellers or other partners.
A number of factors influence the length and variability of our sales cycle, including the need to educate potential customers about the uses and benefits of our solution, the discretionary nature of purchasing and budget cycles, the competitive nature of evaluation and purchasing approval processes, the customer’s contemplated use cases, the specific deployment plan of each customer, the complexity of the customer’s organization, and the difficulty of such deployment, as well as whether a sale is made directly by us or through resellers or other partners.
In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the New York Stock Exchange. 54 Table of Contents Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our management or hinder efforts to acquire a controlling interest in us, and the market price of our Class A common stock may be lower as a result.
In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the New York Stock Exchange. 58 Table of Contents Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our management or hinder efforts to acquire a controlling interest in us, and the market price of our Class A common stock may be lower as a result.
However, there can be no assurance that tax authorities in jurisdictions where we conduct business will not assert that we are subject to additional taxes or required to collect additional taxes or impose additional taxes in the future.
There can be no assurance that tax authorities in jurisdictions where we conduct business will not assert that we are subject to additional taxes or required to collect additional taxes or impose additional taxes in the future.
Risks Related to the Ownership of Our Class A Common Stock Sales of substantial amounts of our Class A common stock in the public markets, or the perception that they might occur, could cause the market price of our Class A common stock to decline.
Risks Related to the Ownership of Our Class A Common Stock Sales or distributions of substantial amounts of our Class A common stock in the public markets, or the perception that they might occur, could cause the market price of our Class A common stock to decline.
Although we may in the future decide to undertake foreign exchange hedging transactions to cover a portion of our foreign currency exchange exposure, we currently do not hedge our exposure to foreign currency exchange risks. 48 Table of Contents Our marketable debt securities portfolio is subject to credit, liquidity, market, and interest rate risks that could cause its value to decline and materially adversely affect our business, financial condition, results of operations, and prospects.
Although we may in the future decide to undertake foreign exchange hedging transactions to cover a portion of our foreign currency exchange exposure, we currently do not hedge our exposure to foreign currency exchange risks. 52 Table of Contents Our marketable debt securities portfolio is subject to credit, liquidity, market, and interest rate risks that could cause its value to decline and materially adversely affect our business, financial condition, results of operations, and prospects.
If any of these events occur, we may not derive some or all of the expected benefits from our NOL carryforwards. 49 Table of Contents If our judgments or estimates relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in our stock price.
If any of these events occur, we may not derive some or all of the expected benefits from our NOL carryforwards. 53 Table of Contents If our judgments or estimates relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in our stock price.
If we fail to successfully manage our anticipated growth, the quality of our Connected Operations Cloud may suffer, which could negatively affect our brand and reputation, harm our ability to retain and attract customers, and adversely impact our business, financial condition, and results of operations. 24 Table of Contents We face intense and increasing competition, and we may not be able to compete effectively, which could reduce demand for our solution and adversely affect our business, revenue growth, and market share.
If we fail to successfully manage our anticipated growth, the quality of our Connected Operations Cloud may suffer, which could negatively affect our brand and reputation, harm our ability to retain and attract customers, and adversely impact our business, financial condition, and results of operations. 25 Table of Contents We face intense and increasing competition, and we may not be able to compete effectively, which could reduce demand for our solution and adversely affect our business, revenue growth, and market share.
We have undertaken certain efforts to conform transfers of personal data subject to the GDPR from the European Economic Area (“EEA”) to the United States and other jurisdictions based on our understanding of current regulatory obligations and the guidance of data protection authorities, including using SCCs approved by the European Commission; however, international data transfers may still be challenged in countries that have not received “adequacy” status from the European Commission.
We have undertaken certain efforts to conform transfers of personal data subject to the GDPR from the European Economic Area (“EEA”) to the United States and other jurisdictions based on our understanding of current regulatory obligations and the guidance of data protection authorities, including the use of SCCs approved by the European Commission; however, international data transfers may still be challenged in countries that have not received “adequacy” status from the European Commission.
If these requirements are found to apply to our products and we fail to comply with them, we may be subject to certain requirements, including requirements that we offer additional portions of our solutions for no cost, that we make available additional source code for modifications or derivative works we create based upon, incorporating or using the open source software, and that we license such modifications or derivative works under the terms of applicable open source licenses.
If these requirements are found to apply to our products and we fail to comply with them, we may be subject to certain requirements, including requirements that we offer additional portions of our solution for no cost, that we make available additional source code for modifications or derivative works we create based upon, incorporating or using the open source software, and that we license such modifications or derivative works under the terms of applicable open source licenses.
Larger competitors, including new entrants to our market, may reduce the price of offerings that compete with ours or may bundle them with other offerings and provide them for free.
Our competitors, including new entrants to our market, may reduce the price of offerings that compete with ours or may bundle them with other offerings and provide them for free.
Our failure to provide and maintain high-quality support services would have an adverse effect on our business, reputation, and results of operations. 22 Table of Contents Our dependence on a limited number of joint design manufacturers and suppliers of manufacturing services and critical components within our supply chain for our IoT devices may adversely affect our ability to sell subscriptions to our Connected Operations Cloud, our margins and our results of operations.
Our failure to provide and maintain high-quality support services would have an adverse effect on our business, reputation, and results of operations. 23 Table of Contents Our dependence on a limited number of joint design manufacturers and suppliers of manufacturing services and critical components within our supply chain for our IoT devices may adversely affect our ability to sell subscriptions to our Connected Operations Cloud, our margins, and our results of operations.
We incur significant costs in our efforts to detect and prevent security breaches and other security-related incidents and we expect to incur additional costs in connection with improvements to our systems and processes in ongoing efforts to prevent such breaches and incidents.
We incur costs in our efforts to detect and prevent security breaches and other security-related incidents and we expect to incur additional costs in connection with improvements to our systems and processes in ongoing efforts to prevent such breaches and incidents.
Despite our efforts, we may not be able to obtain the requisite certifications or otherwise meet particular requirements to sell to certain government entities, and government certification or other requirements for products like ours may change, thereby restricting our ability to sell to the U.S. federal government, state and local governments, education entities, or non-U.S. government sectors until we have attained the appropriate certification or otherwise met their particular requirements.
Despite our efforts, we may not be able to obtain the requisite certifications or otherwise meet particular data security, or other requirements to sell to certain government entities, and government certification or other requirements for products like ours may change, thereby restricting our ability to sell to the U.S. federal government, state and local governments, education entities, or non-U.S. government sectors until we have attained the appropriate certification or otherwise met their particular requirements.
As a result, we may need to engage in equity or debt financings to provide the funds required for these investments and other business endeavors.
As a result, we may need to engage in additional equity or debt financings to provide the funds required for these investments and other business endeavors.
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.
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. 34 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.
Our current and future international business and operations involve a variety of risks, including: • challenges in recruiting, training and retaining qualified employees, particularly in new markets in which we have not historically operated; • slower than anticipated availability and adoption of our solution, or of cloud technologies in general, by potential customers in our target geographies; • changes in a specific country’s or region’s political, economic, or legal and regulatory environment, including geopolitical disputes, pandemics, tariffs, export quotas, custom duties, trade disputes, tax laws and treaties, particularly due to economic tensions and trade negotiations or other trade restrictions, trade wars, or long-term environmental risks; • general economic conditions in each country or region in which we operate; • the need to adapt and localize our solution for specific countries; • greater difficulty collecting accounts receivable, longer sales and payment cycles, and different pricing environments; 33 Table of Contents • new, evolving, potentially inconsistent and often more stringent regulations relating to privacy, data protection and data security and the unauthorized use of, or access to, commercial, biometric, and/or personal information, particularly in Europe; • differing labor regulations, including with respect to wage and hour laws, that make it harder to do business in certain regions such as Europe; • challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs that are specific to each jurisdiction; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, legal and compliance costs associated with international operations; • increased financial accounting and reporting burdens and complexities; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future; • limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • new and different sources of competition; • laws and business practices favoring local competitors or general market preferences for local vendors; • limited or insufficient intellectual property protection or difficulties obtaining, maintaining, protecting, or enforcing our intellectual property rights, including our trademarks and patents, or obtaining necessary intellectual property licenses from third parties; • political instability, geopolitical disputes such as the conflict between Russia and Ukraine or increasing tensions between China and Taiwan, or terrorist activities; • COVID-19 or any other pandemics or epidemics that could result in decreased economic activity in certain markets, decreased use of our products and services, or a decrease in our ability to import, export, or sell our products and services to existing or new customers in international markets; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Our current and future international business and operations involve a variety of risks, including: • challenges in recruiting, training and retaining qualified employees, particularly in new markets where we have not historically operated; • slower than anticipated availability and adoption of our solution, or of cloud technologies in general, by potential customers in our target geographies; • changes in a specific country’s or region’s political, economic, or legal and regulatory environment, including geopolitical disputes, pandemics, tariffs, export quotas, custom duties, trade disputes, tax laws and treaties, particularly due to economic tensions and trade negotiations or other trade restrictions, trade wars, or long-term environmental risks; • general economic conditions in each country or region in which we operate; • the need to adapt and localize our solution and go-to-market practices for specific countries; • greater difficulty collecting accounts receivable, longer sales and payment cycles, and different pricing environments; 35 Table of Contents • new, evolving, potentially inconsistent, and often more stringent regulations relating to privacy, data protection and data security and the unauthorized use of, or access to, commercial, biometric, and/or personal information, particularly in Europe; • differing labor regulations, including with respect to wage and hour laws, that make it harder to do business in certain regions; • challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs that are specific to each jurisdiction; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, legal, and compliance costs associated with international operations; • increased financial accounting and reporting burdens and complexities; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future; • limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • new and different sources of competition; • laws and business practices favoring local competitors or general market preferences for local vendors; • limited or insufficient intellectual property protection or difficulties obtaining, maintaining, protecting, or enforcing our intellectual property rights, including our trademarks and patents, or obtaining necessary intellectual property licenses from third parties; • political instability, geopolitical disputes such as the conflict between Russia and Ukraine, the conflict in Israel and Gaza, or increasing tensions between China and Taiwan, or terrorist activities; • pandemics or epidemics that could result in decreased economic activity in certain markets, decreased use of our solution, or a decrease in our ability to import, export, or sell subscriptions to our solution and services to existing or new customers in international markets; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Any of the foregoing could require us to devote additional research and development resources to re-engineer our solutions, could result in customer dissatisfaction, and may adversely affect our business, financial condition, and results of operations. Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, misappropriation, violation, and other losses.
Any of the foregoing could require us to devote additional research and development resources to re-engineer our solution, could result in customer dissatisfaction, and may adversely affect our business, financial condition, and results of operations. Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, misappropriation, violation, and other losses.
Any violation of the FCPA, other applicable anti-corruption laws, or anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, severe criminal or civil sanctions and suspension or debarment from government contracts, which could have an adverse effect on our reputation, business, financial condition, results of operations, and prospects.
Any violation of the FCPA, other applicable anti-corruption laws, or anti-money laundering laws could result in whistleblower complaints, adverse media coverage, government enforcement investigations, criminal and/or civil sanctions, and suspension or debarment from government contracts, which could have an adverse effect on our reputation, business, financial condition, results of operations, and prospects.
Many factors may contribute to declines in our revenue growth rate, including increased competition, slowing demand for our solution from existing and new customers, a failure by us to continue capitalizing on growth opportunities, terminations of contracts or product returns by our existing customers, the maturation of our business, and macroeconomic factors, among others.
Many factors may contribute to declines in our revenue growth rate, including increased competition, slowing demand for our solution from existing and new customers, a failure by us to continue capitalizing on growth opportunities, terminations of contracts, non-renewals of contracts or product returns by our existing customers, the maturation of our business, and macroeconomic factors, among others.
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.
Customers with substantial or complex organizations may choose to deploy our solution 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.
Our manufacturers and suppliers will continue to face the risk of temporary or permanent disruptions in their manufacturing operations due to equipment breakdowns, labor strikes or shortages, natural disasters, disease outbreaks (such as prior outbreaks of the COVID-19 pandemic) and resulting lockdowns, geopolitical disputes (such as ongoing conflicts between China and other countries), civil unrest, hostilities or wars (such as the ongoing conflict between Russia and Ukraine), component or material shortages, cost increases, acquisitions, insolvency, changes in legal or regulatory requirements, or other similar problems.
Our manufacturers and suppliers will continue to face the risk of temporary or permanent disruptions in their manufacturing operations due to equipment breakdowns, labor strikes or shortages, natural disasters, disease outbreaks (such as outbreaks of the COVID-19 pandemic) and resulting lockdowns, geopolitical disputes (such as ongoing conflicts between China and other countries), civil unrest, hostilities or wars (such as the ongoing conflict between Russia and Ukraine and the conflict in Israel and Gaza), component or material shortages, cost increases, acquisitions, insolvency, changes in legal or regulatory requirements, or other similar problems.
Certain technologies incorporated in our IoT devices, such as lithium batteries and in-cab audio alerts, may increase the risk profile of such devices.
Certain technologies incorporated in our IoT devices, such as lithium batteries, in-cab audio alerts, and immobilizing technologies, may increase the risk profile of such devices.
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.
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. 36 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.
Any actual or perceived security breach or incident affecting our Data Platform or other aspects of our systems, networks, or operations, such as a denial of service attack or other disruption to our Connected Operations Cloud, affecting data we or our service providers process or maintain, or affecting our customers’ equipment or operations could result in a loss of customer confidence in the security or integrity of our solution and damage to our brand and reputation, reduce the demand for our solution, disrupt our normal business operations, require us to spend material resources to correct the breach or incident and otherwise respond to it, expose us to legal liabilities, including claims and litigation by private parties, regulatory investigations and other proceedings, fines, penalties, and indemnity obligations, and materially and adversely affect our financial condition and results of operations.
Any actual or perceived security breach or incident affecting our Data Platform or other aspects of our systems, networks, or operations, such as any compromise of our IoT devices or any denial of service attack or other disruption to our Connected Operations Cloud, affecting data we or our service providers process or maintain, or affecting our customers’ equipment or operations could result in a loss of customer confidence in the security, integrity, or safety of our solution and damage to our brand and reputation, reduce the demand for our solution, disrupt our normal business operations, require us to spend material resources to correct the breach or incident and otherwise respond to it, expose us to legal liabilities, including claims and litigation by private parties, regulatory investigations and other proceedings, fines, penalties, and indemnity obligations, and materially and adversely affect our financial condition and results of operations.
The competitive position of our Connected Operations Cloud depends in part on its ability to operate with a wide variety of data sources and infrastructure, and if we are not successful in maintaining and expanding the compatibility of our solutions with such data sources and infrastructure, our business, financial condition, and results of operations could be adversely impacted.
The competitive position of our Connected Operations Cloud depends in part on its ability to operate with a wide variety of data sources and infrastructure, and if we are not successful in maintaining and expanding the compatibility of our solution with such data sources and infrastructure, our business, financial condition, and results of operations could be adversely impacted.
For example, customers of our Applications for connected sites may have heightened expectations in connection with the security provided by such Applications, given our access to video feeds of their work environments. Moreover, because customers use certain of our Applications for critical compliance functions, defects or errors in such Applications may expose customers to liability or regulatory enforcement.
For example, customers of our Applications for connected sites may have heightened expectations in connection with the security provided by such Applications, given our access to video feeds of their work environments. Moreover, because customers use some of our Applications for critical compliance functions, defects or errors in such Applications may expose customers to liability or regulatory enforcement.
These factors could materially and adversely affect our business, financial condition, and results of operations. 39 Table of Contents We are subject to stringent and changing laws, regulations, standards, and contractual obligations related to privacy, data protection, and data security. Any actual or perceived failure to comply with such obligations could harm our business.
These factors could materially and adversely affect our business, financial condition, and results of operations. 42 Table of Contents We are subject to stringent and changing laws, regulations, standards, and contractual obligations related to privacy, data protection, and data security. Any actual or perceived failure to comply with such obligations could harm our business.
If U.S. or other foreign tax authorities change applicable tax laws, our overall tax liabilities could increase, and our business, financial condition or results of operations may be adversely impacted. Our international operations may subject us to potential adverse tax consequences. We are expanding our international operations to better support our growth into international markets.
If U.S. or other non-U.S. tax authorities change applicable tax laws, our overall tax liabilities could increase, and our business, financial condition, or results of operations may be adversely impacted. Our international operations may subject us to potential adverse tax consequences. We are expanding our international operations to better support our growth into international markets.
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.
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 solution, 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.
The market price of our Class A common stock may fluctuate significantly in response to numerous factors in addition to the ones described in the preceding risk factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition, results of operations or key business metrics and non-GAAP financial measures; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations or capital commitments; • changes in stock market valuations and operating performance of other technology companies generally, or those in our industry in particular; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • changes in our Board of Directors, management or personnel; 50 Table of Contents • sales of large blocks of our Class A common stock, including sales by our executive officers and directors, as well as sales in connection with our quarterly RSU settlements to cover tax withholding and remittance obligations; • actual or perceived privacy or security incidents affecting our solution or otherwise affecting us; • lawsuits threatened or filed against us; • anticipated or actual changes in laws, regulations or government policies applicable to our business or our customers’ businesses; • changes in the anticipated future size or growth rate of our addressable markets; • changes in our capital structure, such as future issuances of debt or equity securities; • short sales, hedging and other derivative transactions involving our capital stock; • general economic conditions in the United States, including economic slowdowns, the occurrence or expectation of recessions, financial distress caused by recent or potential bank failures, elevated inflation and interest rates, and tightening of credit markets; • other events or factors, including those resulting from geopolitical disputes (including but not limited to the ongoing conflict between Ukraine and Russia and geopolitical tensions involving China), pandemics (including COVID-19), incidents of terrorism or responses to these events; and • the other factors described in this “Risk Factors” section and the section titled “Special Note Regarding Forward-Looking Statements” of this Annual Report on Form 10-K.
The market price of our Class A common stock may fluctuate significantly in response to numerous factors in addition to the ones described in the preceding risk factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition, results of operations, or key business metrics and non-GAAP financial measures; • the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections; 54 Table of Contents • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations, or capital commitments; • changes in stock market valuations and operating performance of other technology companies generally, or those in our industry in particular; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • changes in our Board of Directors, management, or personnel; • sales of large blocks of our Class A common stock, including sales by our executive officers and directors, as well as sales in connection with our RSU settlements to cover tax withholding and remittance obligations; • actual or perceived privacy or security incidents affecting our solution or otherwise affecting us; • lawsuits threatened or filed against us; • anticipated or actual changes in laws, regulations, or government policies applicable to our business or our customers’ businesses; • changes in the anticipated future size or growth rate of our addressable markets; • changes in our capital structure, such as future issuances of debt or equity securities; • short sales, hedging, and other derivative transactions involving our capital stock; • general economic conditions, including economic slowdowns, the occurrence or expectation of recessions, financial distress caused by prior or anticipated bank failures, elevated inflation and interest rates, and tightening of credit markets; • other events or factors, including those resulting from geopolitical disputes (including but not limited to the ongoing conflict between Russia and Ukraine, the conflict in Israel and Gaza, and geopolitical tensions involving China), pandemics (including COVID-19), incidents of terrorism or responses to these events; and • the other factors described in this “Risk Factors” section and the section titled “Special Note Regarding Forward-Looking Statements” of this Annual Report on Form 10-K.
The implementation of unfavorable regulations, industry standards or similar customer requirements, or unfavorable interpretations of existing regulations by courts or regulatory bodies, could require us to incur significant compliance costs, cause the development of the affected products to become impractical, or otherwise adversely affect our ability to produce, market and sell subscriptions to our solution.
The implementation of unfavorable regulations, industry standards, or similar customer requirements, or unfavorable interpretations of existing regulations by courts or regulatory bodies, could require us to incur significant compliance costs, cause the development of our solution to become impractical, or otherwise adversely affect our ability to produce, market, and sell subscriptions to our solution.
We could also face subscription terminations and a reduction in renewals, which could significantly affect both our current and future revenue. We offer multiple tiers of subscriptions to our products and, as such, our service-level commitments will increase if more customers choose higher tier subscriptions.
We could also face subscription terminations and a reduction in renewals, which could significantly affect both our current and future revenue. We offer multiple tiers of subscriptions to our solution and, as such, our service-level commitments will increase if more customers choose higher tier subscriptions.
Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our products. In addition, others may independently discover our trade secrets and confidential information, and in such cases we could not assert any trade secret rights against such parties.
Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our solution. In addition, others may independently discover our trade secrets and confidential information, and in such cases we could not assert any trade secret rights against such parties.
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.
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 solution on certain open source software, and such litigation could be costly for us to defend or subject us to an injunction.
We are subject to requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that require us to conduct due diligence on and disclose whether or not our products contain conflict minerals as defined under these provisions.
We are subject to requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that require us to conduct due diligence on and disclose whether our products contain conflict minerals as defined under these provisions.
For example, as a result of COVID-19 and the resulting economic conditions, we have experienced an increase in the average length of sales cycles to onboard new customers, delays in new projects and purchasing decisions, and requests by some customers for contract renegotiations or extension of payment obligations, all of which have adversely affected, and could materially and adversely impact, our business, financial condition, and results of operations in future periods.
For example, as a result of the COVID-19 pandemic and subsequent economic conditions, we have experienced an increase in the average length of sales cycles to onboard new customers, delays in new projects and purchasing decisions, and requests by some customers for contract renegotiations or extension of payment obligations, all of which have adversely affected, and could materially and adversely impact, our business, financial condition, and results of operations in future periods.
Our ability to attract new customers and increase revenue from existing customers depends in large part on our ability to enhance and improve our existing Applications and to introduce compelling new Applications and features that reflect the changing nature of our customers’ needs and the regulations to which they are subject.
Our ability to attract new customers and increase revenue from existing customers depends in large part on our ability to enhance and improve our existing offerings and to introduce compelling new Applications, hardware, and features that reflect the changing nature of our customers’ needs and the regulations to which they are subject.
Changes in our platform, products, services, technology and software or changes in export and import regulations may create delays in the introduction of our platform in international markets, prevent our customers with international operations from deploying our platform globally or, in some cases, prevent the export or import of our platform to certain countries, governments, or persons altogether.
Changes in our platform, solution, services, technology, and software or changes in export and import regulations may create delays in the introduction of our platform in international markets, prevent our customers with international operations from deploying our platform globally or, in some cases, prevent the export or import of our platform to certain countries, governments, or persons altogether.
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.
If we are unable to compete successfully against current and future competitors, our business, financial condition, and results of operations would be harmed. 26 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 or safe, our reputation may be harmed, and our business could be materially and adversely affected.
We may not have adequate contractual protections in place with our customers, users, joint-design manufacturers, third-party vendors, service providers, and partners to protect against costs and liabilities resulting from defects in our products or components therein.
We may not have adequate contractual protections in place with our customers, users, joint-design manufacturers, third-party vendors, service providers, and partners to protect against costs and liabilities resulting from defects in our solution or components therein.
The future cost associated with providing product warranties and/or bearing the cost of repair or replacement of our products, or a refund of customer expenses, could exceed our historical experience and have a material adverse effect on our business, financial condition, and results of operations.
The future cost associated with providing product warranties and/or bearing the cost of repair or replacement of our solution, or a refund of customer expenses, could exceed our historical experience and have a material adverse effect on our business, financial condition, and results of operations.
In addition, despite our precautions, it may be possible for unauthorized third parties to copy our products, use information that we regard as proprietary to create offerings that compete with ours, or infringe upon or misappropriate our intellectual property.
In addition, despite our precautions, it may be possible for unauthorized third parties to copy our solution, use information that we regard as proprietary to create offerings that compete with ours, or infringe upon or misappropriate our intellectual property.
If we are unable to expand and successfully onboard our sales force at sufficiently high levels, our ability to attract new customers may be harmed, and our business, financial condition and results of operations would be adversely affected.
If we are unable to expand and successfully onboard our sales force and new sales and marketing leaders at sufficiently high levels, our ability to attract new customers may be harmed, and our business, financial condition, and results of operations would be adversely affected.

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Item 2. Properties

Properties — owned and leased real estate

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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.
Biggest changeAs of February 3, 2024, 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. 58 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.
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For additional information on legal proceedings, refer to the section titled “Litigation” under Note 9, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 64 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 changeThe 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.
Biggest changeUse of Proceeds On December 17, 2021, we completed our IPO. 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 SEC on December 14, 2021.
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.
Issuer Purchases of Equity Securities None. 65 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 holders. • Class B common stock: 58 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: 42 stockholders of record. • Class C common stock: There were no shares outstanding.
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.
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 February 3, 2024 (the last day in our fiscal year 2024) 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.
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.
Our Class B and Class C common stock are neither listed nor publicly traded. Holders of Record Holders of our common stock as of February 3, 2024 were as follows: • Class A common stock: 41 stockholders of record.
Removed
Unregistered Sales of Equity Securities None. Use of Proceeds On December 17, 2021, we completed our initial public offering (“IPO”).
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Securities Authorized for Issuance under Equity Compensation Plans The information required by this item is incorporated herein by reference to the definitive proxy statement for our annual meeting of stockholders, which will be filed with the SEC within 120 days of our fiscal year ended February 3, 2024. Unregistered Sales of Equity Securities None.
Removed
Company/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

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe 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.
Biggest changeThe following table presents a reconciliation of free cash flow to net cash used in operating activities for the periods presented (in thousands, except percentages): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Net cash used in operating activities $ (11,815) $ (103,021) $ (171,481) Purchase of property and equipment (10,953) (33,240) (19,353) Free cash flow (1) $ (22,768) $ (136,261) $ (190,834) Net cash used in operating activities margin (1) % (16) % (40) % Free cash flow margin (1) (2) % (21) % (45) % Net cash used in investing activities $ (78,687) $ (631,848) $ (20,035) Net cash provided by financing activities $ 20,997 $ 14,212 $ 701,644 __________ (1) Free cash flow includes the cash impact of non-recurring capital expenditures associated with the build-out of our corporate office facilities in San Francisco, California, net of tenant allowances, and legal settlements (in thousands): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Purchase of property and equipment for build-out of corporate office facilities, net of tenant allowances (2) $ (10,179) $ 26,227 $ 11,096 Legal settlement (3) $ 60,000 $ — $ — (2) In April 2023, we settled a lease dispute which was primarily related to lease incentives associated with leasehold improvements in the form of a tenant allowance and received $11.3 million.
Our solution is used by businesses of varying sizes across a broad range of industries that depend on physical operations, including: transportation, wholesale and retail trade, construction, field services, logistics, utilities and energy, government, healthcare and education, manufacturing, food and beverage, and others.
Our solution is used by businesses of varying sizes across a broad range of industries that depend on physical operations, including: transportation, construction, wholesale and retail trade, field services, logistics, utilities and energy, government, healthcare and education, manufacturing, food and beverage, and others.
ARR should be viewed independently of revenue and is not intended to be combined with or to replace it. ARR is not a forecast and the active contracts at the date used in calculating ARR may or may not be extended or renewed.
ARR should be viewed independently of revenue and is not intended to be combined with or replace it. ARR is not a forecast, and the active contracts at the date used in calculating ARR may or may not be extended or renewed.
We define ARR as the annualized value of subscription contracts that have commenced revenue recognition as of the measurement date. ARR highlights trends that may be less visible from the face of our financial statements due to ratable revenue recognition. ARR does not have a standardized meaning and is not necessarily comparable to similarly titled measures presented by other companies.
We define ARR as the annualized value of subscription contracts that have commenced revenue recognition as of the measurement date. ARR highlights trends that may be less visible from our financial statements due to ratable revenue recognition. ARR does not have a standardized meaning and is not necessarily comparable to similarly titled measures presented by other companies.
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.
We generally 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.
Adjusted free cash flow margin is calculated as adjusted free cash flow as a percentage of total revenue. We believe that adjusted free cash flow and adjusted free cash flow margin, even if negative, are useful in evaluating liquidity and provide information to management and investors about our ability to fund future operating needs and strategic initiatives.
Free cash flow margin is calculated as free cash flow as a percentage of total revenue. We believe that free cash flow and free cash flow margin, even if negative, are useful in evaluating liquidity and provide information to management and investors about our ability to fund future operating needs and strategic initiatives.
Non-GAAP operating margin is defined as non-GAAP operating loss as a percentage of total revenue. We use non-GAAP loss from operations and non-GAAP operating margin in conjunction with traditional GAAP measures to evaluate our financial performance.
Non-GAAP operating margin is defined as non-GAAP operating income (loss) as a percentage of total revenue. We use non-GAAP income (loss) from operations and non-GAAP operating margin in conjunction with traditional GAAP measures to evaluate our financial performance.
We believe that non-GAAP loss from operations and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations.
We believe that non-GAAP income (loss) from operations and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations.
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.
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 smaller customers onto our platform.
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 income (loss) provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations.
Sales and marketing expenses also include expenditures related to advertising, media, marketing, promotional costs, free trial expenses, brand awareness activities, business development, corporate partnerships, travel, conferences and events, professional services, and allocated overhead costs. 64 Table of Contents We plan to continue to invest in sales and marketing to grow our customer base and increase our brand awareness.
Sales and marketing expenses also include expenditures related to advertising, media, marketing, promotional costs, free trial expenses, brand awareness activities, business development, corporate partnerships, travel, conferences and events, professional services, and allocated overhead costs. 70 Table of Contents We plan to continue to invest in sales and marketing to grow our customer base and increase our brand awareness.
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 Applications 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.
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.
Refer to the section titled “Risk Factors” for further discussion of the impacts of macroeconomic trends 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.
Lease Modification, Impairment, and Related Charges Lease modification, impairment, and related charges consist of impairment charges related to the sublease and abandonment of facilities, as well as the derecognition of operating lease liabilities and right-of-use (“ROU”) assets in connection with a lease modification and related accelerated depreciation expense.
Lease Modification, Impairment, and Related Charges Lease modification, impairment, and related charges consist of impairment charges related to the sublease and abandonment of facilities, as well as the derecognition of operating lease liabilities and right-of-use (“ROU”) assets in connection with a lease modification and related accelerated depreciation expense, if any.
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.
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, and the success of our efforts to expand internationally.
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.
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, and commercial paper.
As a result of the highly interdependent and interrelated nature of the integrated service provided, these arrangements are accounted for as a combined performance obligation to the customer. The combined performance obligation is satisfied over time, as we continually provide access to and fulfill our obligation to the customer over the subscription term.
As a result of the highly interdependent and interrelated nature of the integrated service provided, these arrangements are accounted for as a combined performance obligation to the customer. 79 Table of Contents The combined performance obligation is satisfied over time, as we continually provide access to and fulfill our obligation to the customer over the subscription term.
Our Business Model In each of the past three fiscal years, we generated approximately 98% of our revenue from subscriptions to our Connected Operations Cloud, which today includes Applications for Video-Based Safety, Vehicle Telematics, Apps and Driver Workflows, Equipment Monitoring, and Site Visibility.
Our Business Model In each of the past two fiscal years, we generated approximately 98% of our revenue from subscriptions to our Connected Operations Cloud, which today includes Applications for Video-Based Safety, Vehicle Telematics, Mobile Apps and Workflows, Equipment Monitoring, and Site Visibility.
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.
Our ARR has grown in each of the past two 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 with larger customers.
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.
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 purchases under the 2021 ESPP 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.
In addition, adjusted free cash flow does not reflect our future contractual commitments or the total increase or decrease of our cash balance for a given period. All of these limitations could reduce the usefulness of these non-GAAP financial measures as analytical tools.
In addition, free cash flow does not reflect our future contractual commitments or the total increase or decrease of our cash balance for a given period. These and other limitations could reduce the usefulness of these non-GAAP financial measures as analytical tools.
Additionally, our Connected Operations Cloud then utilizes this data to deliver actionable real-time business insights that are promised to our customers throughout the term of their subscription to Applications on the Connected Operations Cloud.
Additionally, our Connected Operations Cloud then utilizes this data to deliver actionable insights that are promised to our customers throughout the term of their subscription to Applications on the Connected Operations Cloud.
In reaching this conclusion, we considered the context of the contract and the nature of our promise to provide the customer with actionable real-time business insights to manage their operations.
In reaching this conclusion, we considered the context of the contract and the nature of our promise to provide the customer with actionable insights to manage their operations.
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, facilities, and certain IT 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.
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.
We expect our general and administrative expenses to continue to increase in absolute dollars for the foreseeable future to support our growth and because of additional costs associated with legal, accounting, compliance, insurance, investor relations, and other areas associated with being a public company.
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.
Contractual Obligations and Commitments Our estimated future obligations consist of leases and non-cancelable purchase commitments as of February 3, 2024. 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.
Cost of Revenue Cost of revenue consists primarily of the amortization of IoT device costs associated with subscription agreements, cellular-related costs, third-party cloud infrastructure expenses, customer support costs, warranty charges, and operational costs consisting of employee-related costs, including salaries, employee benefits and stock-based compensation, amortization of internal-use software development costs, expenses related to shipping and handling, packaging, fulfillment, warehousing, write-downs of excess and obsolete inventory, and allocated overhead costs.
Cost of Revenue Cost of revenue consists primarily of the amortization of IoT device costs associated with subscription agreements, cellular-related costs, third-party cloud infrastructure expenses, customer support costs, warranty charges, and employee-related costs directly associated with our customer support and operations, including salaries, employee benefits and stock-based compensation, amortization of internal-use software development and certain cloud computing implementation costs, expenses related to shipping and handling, packaging, fulfillment, warehousing, write-downs of excess and obsolete inventory, and allocated overhead costs.
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.
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 February 3, 2024.
Non-GAAP Net Loss We define non-GAAP net loss as net loss excluding stock-based compensation expense-related charges, including employer taxes on employee equity transactions, lease modification, impairment, and related charges, and restructuring and related charges. We use non-GAAP net loss in conjunction with traditional GAAP measures to evaluate our financial performance.
Non-GAAP Net Income (Loss) We define non-GAAP net income (loss) as net loss excluding the effect of stock-based compensation expense-related charges, including employer taxes on employee equity transactions, lease modification, impairment, and related charges, and legal settlements. We use non-GAAP net income (loss) in conjunction with traditional GAAP measures to evaluate our financial performance.
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.
Cash used in operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation, net accretion of discounts on marketable debt securities, depreciation and amortization of property and equipment, lease modification, impairment, and related charges, non-cash legal settlement, and non-cash operating lease costs, and changes in operating assets and liabilities during each period.
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.
As our customers expand and increase the use of our Connected Operations Cloud driven by additional IoT devices and Applications, our cost of revenue may vary from quarter to quarter as a percentage of our revenue due to the timing and extent of these expenses.
We use non-GAAP gross profit and non-GAAP gross margin in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations.
We believe that non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations.
For example, our business and results of operations could be affected by global macroeconomic trends and events such as inflationary pressure, interest rate increases and declines in consumer confidence, widespread disruptions of supply chains and freight and shipping channels, increased prices for many goods and services (including fluctuating fuel costs), labor shortages, delayed or reduced spending on information technology products, and significant volatility and disruption of financial markets, as well as other conditions arising from international conflicts, such as the ongoing conflict between Russia and Ukraine and geopolitical tensions involving China, and the COVID-19 pandemic, including the emergence of new variant strains.
For example, our business and results of operations could be affected by global macroeconomic trends and events such as inflationary pressure, interest rate increases and declines in consumer confidence, widespread disruptions of supply chains and freight and shipping channels, increased prices for many goods and services (including fluctuating fuel costs), labor shortages, delayed or reduced spending on IT products, and significant volatility and disruption of financial markets, as well as other conditions arising from international conflicts, such as the ongoing conflict between Russia and Ukraine, geopolitical tensions involving China, and the conflict in Israel and Gaza, uncertainty around the outcome of political elections, and the emergence of pandemics and epidemics.
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.
A discussion of our financial condition and results of operations and our liquidity and capital resources for fiscal year 2022, and year-to-year comparisons between fiscal years 2023 and 2022 can be found under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended January 28, 2023 included in Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on March 21, 2023.
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.
Our net loss was $286.7 million and $247.4 million for the fiscal years ended February 3, 2024 and January 28, 2023, respectively. Our business model focuses on maximizing the lifetime value of our customer relationships, and we continue to make significant investments to grow our customer base.
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.
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 February 3, 2024 January 28, 2023 January 29, 2022 Gross profit $ 690,353 $ 469,889 $ 303,861 Add: Stock-based compensation expense-related charges (1) 12,725 9,466 6,344 Non-GAAP gross profit $ 703,078 $ 479,355 $ 310,205 GAAP gross margin 74 % 72 % 71 % Non-GAAP gross margin 75 % 73 % 72 % __________ (1) Stock-based compensation expense-related charges included approximately $0.8 million, $0.3 million, and $0.3 million of employer taxes on employee equity transactions for the fiscal years ended February 3, 2024, January 28, 2023, and January 29, 2022, respectively. 75 Table of Contents Non-GAAP Income (Loss) from Operations and Non-GAAP Operating Margin We define non-GAAP income (loss) from operations, or non-GAAP operating income (loss), as income (loss) from operations excluding the effect of stock-based compensation expense-related charges, including employer taxes on employee equity transactions, lease modification, impairment, and related charges, and legal settlements.
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.
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.
While we expect our general and administrative expenses to decrease as a percentage of our revenue over the long term, our general and administrative expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.
Our general and administrative expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.
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”).
This section of our Annual Report on Form 10-K generally discusses our financial condition and results of operations for fiscal years 2024 and 2023, and year-to-year comparisons between fiscal years 2024 and 2023 in accordance with GAAP.
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.
Cash Flows The following table shows a summary of our cash flows for the periods presented (in thousands): Fiscal Year Ended February 3, 2024 January 28, 2023 Net cash used in operating activities $ (11,815) $ (103,021) Net cash used in investing activities $ (78,687) $ (631,848) Net cash provided by financing activities $ 20,997 $ 14,212 Operating Activities Our largest source of operating cash is payments received from our customers.
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.
The following table presents a reconciliation of our non-GAAP income (loss) from operations to our GAAP loss from operations for the periods presented (in thousands, except percentages): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Loss from operations $ (323,347) $ (259,455) $ (353,848) Add: Stock-based compensation expense-related charges (1) 251,190 181,424 238,238 Lease modification, impairment, and related charges 4,762 1,056 1,532 Legal settlement (2) 68,665 — — Non-GAAP income (loss) from operations $ 1,270 $ (76,975) $ (114,078) GAAP operating margin (34) % (40) % (83) % Non-GAAP operating margin 0 % (12) % (27) % __________ (1) Stock-based compensation expense-related charges included approximately $14.1 million, $4.0 million, and $9.5 million of employer taxes on employee equity transactions for the fiscal years ended February 3, 2024, January 28, 2023, and January 29, 2022, respectively.
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.
We believe that our existing cash, cash equivalents, and short-term and long-term investments will be sufficient to support working capital, including our non-cancelable arrangements, and capital expenditure requirements for at least the next 12 months. As of February 3, 2024, our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments of $823.8 million.
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%.
We were founded in 2015 and have achieved significant growth since our inception. For the fiscal years ended February 3, 2024 and January 28, 2023, our revenue was $937.4 million and $652.5 million, respectively, representing year-over-year growth of 44% or year-over-year adjusted revenue growth of 41%.
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.
As of February 3, 2024, over 80% of our Core Customers and 90% of our customers representing over $100,000 in ARR are using multiple Applications.
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.
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. Our research and development expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.
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.
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 is a system of record that enables businesses that depend on physical operations to harness IoT data to develop actionable insights and improve their operations.
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.
We have generated significant operating losses from our operations, as reflected in our accumulated deficit of $1,455.1 million as of February 3, 2024.
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.
Lease Modification, Impairment, and Related Charges Lease modification, impairment, and related charges are summarized as follows (in thousands, except percentages): Fiscal Year Ended Change February 3, 2024 January 28, 2023 Amount % Lease modification, impairment, and related charges $ 4,762 $ 1,056 $ 3,706 351 % Lease modification, impairment, and related charges increased by $3.7 million, or 351%, for the fiscal year ended February 3, 2024 compared to the fiscal year ended January 28, 2023.
We expect to continue to incur operating losses and generate negative cash flows from operations for the foreseeable future due to the investments we intend to make in our business, and as a result, we may require additional capital resources to execute on our strategic initiatives to grow our business.
We intend to continue making investments in our business, and as a result, we may require additional capital resources to execute on our strategic initiatives to grow our business, particularly if we generate negative cash flows in future quarters.
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.
Our primary uses of cash include personnel-related costs, third-party cloud infrastructure expenses, sales and marketing expenses, overhead costs, and funding other working capital requirements, such as inventory and connected device costs to meet our performance obligations related to our Connected Operations Cloud. 77 Table of Contents 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 necessary to support our efforts to develop our Connected Operations Cloud and meet our performance obligations related to 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.
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. 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.
We may incur additional lease modification, impairment, and related charges in subsequent periods.
We may incur additional lease modification, impairment, and related charges in subsequent periods. Legal Settlement Legal settlement expenses consist of charges related to significant legal settlements. We may incur additional legal settlement expenses in subsequent periods.
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.
Research and Development Research and development expense is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change February 3, 2024 January 28, 2023 Amount % Research and development $ 258,581 $ 187,405 $ 71,176 38 % Percentage of revenue 28 % 29 % Research and development expense increased by $71.2 million, or 38%, for the fiscal year ended February 3, 2024 compared to the fiscal year ended January 28, 2023, primarily due to a $61.1 million increase in employee-related costs, which included a $34.1 million increase in salaries and benefits and related employer taxes and a $27.0 million increase in stock-based compensation expense, primarily due to increased headcount to support our research and development organization.
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.
Our increase in sales and marketing expense was also due to a $16.8 million increase in IT-related charges, software subscriptions, and rent, an $8.9 million increase in expenses relating to lead generation initiatives, an $8.1 million increase in travel-related expenses and expenses relating to our customer visits, conferences, and other events, and a $2.9 million increase in expenses relating to professional services.
Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.
Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. The critical accounting estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements are described below.
Investing Activities Cash used in investing activities was $631.8 million for the fiscal year ended January 28, 2023, which primarily consisted of $685.6 million of purchases of investments and $33.2 million of capital expenditures for additional office facilities, partially offset by $86.6 million of proceeds from maturities of investments.
Cash used in investing activities was $631.8 million for the fiscal year ended January 28, 2023, which primarily consisted of $685.6 million of purchases of investments and $33.2 million of capital expenditures for additional office facilities, partially offset by $86.6 million of proceeds from maturities of investments. 78 Table of Contents Financing Activities Cash provided by financing activities was $21.0 million for the fiscal year ended February 3, 2024, which primarily consisted of $23.2 million of proceeds from employee stock purchases under the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) and exercises of stock options, partially offset by $2.2 million in payments of principal on finance leases.
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.
We remain committed to investing in our sales and marketing capacity and our research and development organization, and to driving revenue growth globally. 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.
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.
In the first quarter of fiscal year 2023, we executed a sublease for certain office space that 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.
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 of February 3, 2024, approximately 52% of our ARR came from customers representing over $100,000 in ARR. These customers generally contribute higher revenue, land with multiple products, have higher retention rates, and demonstrate stronger unit economics.
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.
Provision for Income Taxes Provision for income taxes is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change February 3, 2024 January 28, 2023 Amount % Provision for income taxes $ 3,343 $ 3,587 $ (244) (7 %) Effective tax rate (1.2 %) (1.5 %) The provision for income taxes decreased by $0.2 million, or 7%, for the fiscal year ended February 3, 2024 compared to the fiscal year ended January 28, 2023, primarily due to stock-based compensation expense windfalls within our foreign entities.
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.
Regardless of how our customers land, we focus on expanding their usage of Connected Operations Cloud and encourage full-scale rollouts across their geographies and divisions. 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.
Results 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.
Results of Operations Comparison of the Fiscal Years Ended February 3, 2024 and January 28, 2023 Revenue Our total revenue is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change February 3, 2024 January 28, 2023 Amount % Revenue $ 937,385 $ 652,545 $ 284,840 44 % Revenue increased by $284.8 million, or 44%, for the fiscal year ended February 3, 2024 compared to the fiscal year ended January 28, 2023, primarily due to an increase in customer count and increased purchases of our subscription offerings, including subscriptions to additional Applications, by existing customers, as well as due to an extra week in our fiscal year 2024. 71 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 February 3, 2024 January 28, 2023 Amount % Cost of revenue $ 247,032 $ 182,656 $ 64,376 35 % Gross profit $ 690,353 $ 469,889 Gross margin 74 % 72 % Cost of revenue increased by $64.4 million, or 35%, for the fiscal year ended February 3, 2024 compared to the fiscal year ended January 28, 2023, primarily due to $32.4 million of increased amortization of deferred IoT device costs, $14.8 million of increased employee-related costs, which included an $11.2 million increase in salaries and benefits and related employer taxes and a $3.6 million increase in stock-based compensation expense, $8.3 million of increased infrastructure costs associated with our product offerings, $4.0 million of increased warranty costs, and $3.3 million of increased operational costs to support the growth of our subscription offerings.
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.
The increase in sales and marketing expense was also due to an extra week in our fiscal year 2024. 72 Table of Contents General and Administrative General and administrative expense is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change February 3, 2024 January 28, 2023 Amount % General and administrative $ 195,043 $ 170,785 $ 24,258 14 % Percentage of revenue 21 % 26 % General and administrative expense increased by $24.3 million, or 14%, for the fiscal year ended February 3, 2024 compared to the fiscal year ended January 28, 2023, primarily due to a $36.0 million increase in employee-related costs, which included a $23.8 million increase in salaries and benefits and related employer taxes and a $12.2 million increase in stock-based compensation expense, primarily due to increased headcount to support the growth of our finance, accounting, human resources, and legal functions.
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.
The non-cash charges were primarily comprised of stock-based compensation expense of $237.1 million, depreciation and amortization of $15.5 million, non-cash legal settlement of $8.7 million, and lease modification, impairment, and related charges of $4.8 million, partially offset by net accretion of discounts on marketable debt securities of $16.9 million.
See the section titled “Special Note Regarding Forward-Looking Statements” in this report. These statements, like all statements in this report, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments.
These statements, like all statements in this report, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments. Our fiscal year ends on the Saturday closest to February 1, resulting in a 52-week or 53-week fiscal year.
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.
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 small remaining portion of our revenue not generated from subscriptions to our Connected Operations Cloud comes from the sale of replacement IoT devices, including gateways, sensors and cameras, as well as related shipping and handling fees, and professional services.
The remaining portion of our revenue not generated from subscriptions to our Connected Operations Cloud is derived from the sale of replacement IoT devices, including gateways, sensors and cameras, related shipping and handling fees, and professional services. Allocation of Overhead Costs Overhead costs that are not substantially dedicated to use by a specific functional group are allocated based on headcount.
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.
The following table presents a reconciliation of our non-GAAP net income (loss) to our GAAP net loss for the periods presented (in thousands, except percentages): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Net loss $ (286,726) $ (247,422) $ (355,024) Add: Stock-based compensation expense-related charges 251,190 181,424 238,238 Lease modification, impairment, and related charges 4,762 1,056 1,532 Legal settlement 68,665 — — Non-GAAP net income (loss) (1) $ 37,891 $ (64,942) $ (115,254) __________ (1) There were no material income tax effects on our non-GAAP adjustments for all periods presented. 76 Table of Contents Free Cash Flow and Free Cash Flow Margin We define free cash flow as net cash used in operating activities reduced by cash used for purchases of property and equipment.
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.
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.
In each of our past two fiscal years, we generated approximately 98% of our revenue from subscriptions to our Connected Operations Cloud.
Our Connected Operations Cloud and IoT devices are highly interdependent and interrelated, and represent a combined performance obligation within the context of the contract. In each of our past two fiscal years, we generated approximately 98% of our revenue from subscriptions to our Connected Operations Cloud.
Connected Device Costs We capitalize connected device costs associated with subscription contracts as contract fulfillment costs where the connected device is not distinct from other undelivered obligations in the customer contract. These costs are directly related to customer contracts and are expected to be recoverable and enhance the resources used to satisfy the undelivered performance obligations in those contracts.
Our subscription contracts transfer title to the connected device to the customer upon shipment and are invoiced monthly, quarterly, annually, or in advance. Connected Device Costs We capitalize connected device costs associated with subscription contracts as contract fulfillment costs where the connected device is not distinct from other undelivered obligations in the customer contract.
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.
Our gross margin increased to 74% for the fiscal year ended February 3, 2024 compared to 72% for the fiscal year ended January 28, 2023, mainly due to operational efficiencies in infrastructure costs.
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.
Sales and Marketing Sales and marketing expense is summarized as follows (in thousands, except percentages): Fiscal Year Ended Change February 3, 2024 January 28, 2023 Amount % Sales and marketing $ 486,649 $ 370,098 $ 116,551 31 % Percentage of revenue 52 % 57 % Sales and marketing expense increased by $116.6 million, or 31%, for the fiscal year ended February 3, 2024 compared to the fiscal year ended January 28, 2023, primarily due to a $74.3 million increase in employee-related costs, which included a $56.6 million increase in salaries and benefits and related employer taxes and a $17.7 million increase in stock-based compensation expense, primarily due to increased headcount to support our sales organization.
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.
Our increase in general and administrative expense was also due to a $6.5 million increase in expenses relating to legal fees and professional services. The increases in general and administrative expense were partially offset by a $19.5 million decrease in IT-related costs and rent.
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.
We recognize revenue from our subscriptions ratably over the term of the contract. We bill monthly, quarterly, semi-annually, annually, or in advance, depending on the specifics of each contract. 67 Table of Contents Our go-to-market strategy is focused on landing new customers and expanding their adoption of our Connected Operations Cloud.
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.
We have increased our headcount from 2,266 employees as of the last business day of the fiscal year ended January 28, 2023 to 2,895 employees as of the last business day of the fiscal year ended February 3, 2024.
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.
Such costs include costs associated with office facilities, depreciation of property and equipment, IT and security expenses, and other expenses, such as corporate software, subscription services, and insurance.
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.
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 February 3, 2024 January 28, 2023 January 29, 2022 Adjusted revenue (1) $ 917,651 $ 652,545 $ 428,345 Adjusted revenue growth rate (1) 41 % 52 % 71 % Non-GAAP gross profit $ 703,078 $ 479,355 $ 310,205 Non-GAAP gross margin 75 % 73 % 72 % Non-GAAP income (loss) from operations $ 1,270 $ (76,975) $ (114,078) Non-GAAP operating margin 0 % (12) % (27) % Non-GAAP net income (loss) $ 37,891 $ (64,942) $ (115,254) Net cash used in operating activities $ (11,815) $ (103,021) $ (171,481) Free cash flow $ (22,768) $ (136,261) $ (190,834) Free cash flow margin (2) % (21) % (45) % __________ (1) The fourth quarter of fiscal year 2024 was a 14-week fiscal quarter instead of a typical 13-week fiscal quarter.
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.
Key Business Metrics The following table shows a summary of our key business metrics as of the periods presented (dollars in thousands): As of February 3, 2024 January 28, 2023 January 29, 2022 ARR $ 1,101,981 $ 795,053 $ 558,113 Customers > $100,000 ARR 1,848 1,237 806 5 We previously defined “Core Customers” as customers representing over $5,000 in ARR.
The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In particular, we encourage you to review the risks and uncertainties described in “Part I, Item 1A. Risk Factors” or included elsewhere in this report.
Some of the information contained in the following discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+1 added−0 removed7 unchanged
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.
Biggest changeAs of January 28, 2023, we had $803.0 million of cash, cash equivalents, and short-term and long-term investments, and a 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. Foreign Currency Exchange Risk Our reporting currency is the U.S. dollar.
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
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. 80 Table of Contents
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.
Interest Rate Risk As of February 3, 2024, we had $823.8 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, and commercial paper. In addition, we had $19.2 million of restricted cash primarily due to outstanding letters of credit.
Added
A hypothetical 100 basis point increase or decrease in interest rates would have resulted in a decrease or an increase of $5.3 million in the market value of our cash equivalents, and short-term and long-term investments as of February 3, 2024.

Other IOT 10-K year-over-year comparisons