Digital transformation is imperative for companies to compete. Those companies that successfully transform their businesses through modern applications, digital workflows, and intuitive user experiences often benefit from loyal customers, innovative offerings, and scalable business models that drive greater profitability.
This transformation has already happened across many large industries. In the retail, advertising, media, and information technology industries, for example, innovative, digital-first entrants have disrupted older business models, fundamentally changing how they operate.
Businesses in industries like transportation, wholesale and retail trade, construction, field services, logistics, utilities, 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.
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. Without connected digital tools, physical operations businesses struggle to access real-time data, making it nearly impossible to achieve complete operational visibility or drive meaningful improvements in productivity.
Samsara is solving the problem of opaque operations and disconnected systems. In this strategy story, we analyzed the business model of Samsara. We also learned how does Samsara work and make money. Who are the major competitors for Samsara?
What does Samsara do? How does Samsara work?
Samsara, founded in 2015, is on a mission to increase the safety, efficiency, and sustainability of the operations that power the global economy. Samsara pioneered the Connected Operations Cloud, which allows businesses that depend on physical operations to harness IoT data to develop actionable business insights and improve their operations.
By harnessing IoT connectivity, AI, cloud computing, and video imagery, Samsara enables the digital transformation of physical operations. Using Samsara’s Connected Operations Cloud, customers can visualize their physical operations in real-time on one integrated platform.
Samsara’s Connected Operations Cloud consolidates data from its IoT devices and a growing ecosystem of connected assets and third-party systems. It makes it easy for organizations to access, analyze and act on data insights. Samsara’s suite of solutions enables organizations to embrace and deploy a digital, cloud-connected strategy across their operations.
Samsara provides an end-to-end solution for operations in a subscription-based business model. Samsara’s solution connects physical operations data to Samsara’s Connected Operations Cloud, which consists of Samsara’s Data Platform and Applications.
Let’s understand how does the data platform of Samsara work. Samsara’s Data Platform ingests, aggregates, and enriches data from Samsara’s IoT devices and a growing ecosystem of connected assets and third-party systems and makes the data actionable for use cases through Samsara’s Applications.
Samsara’s solution includes IoT devices that capture data and connect it to the cloud for the many offline physical assets. Samsara partners with OEMs to capture data via APIs for the physical assets that are increasingly embedded with cloud connectivity. This operational and IT data is ingested into Samsara’s Data Platform, where it is aggregated, enriched, and analyzed.
What is the business model of Samsara?
Value Proposition
Captures and Connects IoT Data: Samsara’s solution captures, connects, and aggregates data into Samsara’s cloud-based Data Platform. Samsara captures data using self-installed plug-and-play IoT devices for assets without embedded sensors. For offline assets with built-in sensors, Samsara provides connectivity to the internet.
Provides a Single Pane of Glass: Samsara’s Data Platform brings disparate IoT data together in one place, providing Samsara’s customers with a “single pane of glass” so that users have visibility into their physical operations across their entire organizations.
Improves Safety and Reduces Costs: Samsara enables customers to actively monitor safety issues by leveraging IoT data and AI to extract patterns and improve their safety programs through videos.
Increases Operational Efficiency: Samsara’s solution enables Samsara’s customers to improve productivity by making data-driven decisions and automating previously manual tasks. The end result is a more efficient use of time and resources and the ability to make real-time decisions.
Enhances Sustainability: Samsara’s solution allows customers to reduce their environmental footprint. This includes monitoring carbon emissions, identifying fuel and energy waste, reducing paper waste, decreasing food waste, monitoring environmental pollutants, and using data to accelerate the broader adoption of electric vehicles in commercial fleets.
Samsara’s Products and Applications
Samsara’s Connected Operations Cloud includes an extensive AI-powered Data Platform that brings real-time visibility, analytics, and insights to Samsara’s customers’ physical operations. Samsara has built numerous Applications on its Data Platform to operationalize these analytics and insights.
Video-Based Safety
- Cloud-Based Visibility: Samsara’s safety solution allows customers to view, analyze, and archive video from connected IoT dash cameras. By combining dashcam footage with speeding and accelerometer data, customers can reconstruct incidents, exonerate drivers in not-at-fault situations, and reduce costs by refuting fraudulent claims.
- AI-Based Computer Vision: Samsara’s 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, Samsara’s system can alert drivers using real-time, in-cab audio alerts.
- Scoring and Reporting: Samsara’s safety coaching tools use driver data to identify top performers and those needing coaching and give customers a fleet-wide view of risk factors and trends around speeding, distraction, harsh driving, and more.
- Coaching Workflows: Samsara’s coaching solution provides video-centric software workflows to customers, enabling them to coach drivers and monitor coaching effectiveness systematically.
Vehicle Telematics
- Real-Time GPS Tracking: Samsara’s real-time vehicle location tracking gives customers visibility into their entire fleet, enabling rapid operational improvement.
- Routing and Dispatch: Customers can manage, track, update, and share route progress with their end-customers to improve on-time arrivals and end-customer satisfaction.
- Reporting and Alerts: Customizable and actionable reporting and alerts give customers real-time visibility into operational performance so they can proactively avoid service or work disruptions.
- Maintenance: Samsara’s maintenance suite proactively spots and alerts customers of equipment issues in real-time so that they can reduce equipment downtime and lower costs.
- Fuel Management: Samsara’s 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.
- Electric Vehicles: Samsara’s EV suite provides real-time charging station status and alerts, route planning, and usage reporting to increase the efficiency of electric fleets.
- OEM Telematics Integrations: We partner with leading OEMs to capture data from their siloed clouds into Samsara’s Connected Operations Cloud, where we enrich and analyze the data and enable customers to benefit from Samsara’s Applications without needing to install an aftermarket IoT device in their vehicle.
Apps and Driver Workflows
- Driver Workflow: Samsara’s Driver application gives drivers key information and workflow tools to complete daily tasks, improving productivity and compliance and reducing manual error.
- Electronic Documents: Real-time, cloud-enabled electronic document capture simplifies driver workload and centralizes data for back-office administration to investigate claims and improve efficiency.
- Compliance: Samsara’s Electronic Logging Device (ELD) is registered with the Federal Motor Carrier Safety Administration (FMCSA) and allows customers to simplify Hours of Service (HOS) compliance.
Equipment Monitoring
- Location, Utilization, and Theft Monitoring: Samsara’s real-time location tracking and utilization reporting can reduce theft, improve utilization and simplify asset allocation and rightsizing.
- Maintenance: Samsara’s solution provides visibility into equipment usage and anomalies, such as engine faults. With this data, customers can improve equipment maintenance schedules based on device usage and health and can act on early warning signs to avoid unplanned downtime.
- Refrigerated Trailer and Cold Chain Monitoring: Samsara’s solution allows for real-time temperature monitoring and remote refrigeration control for customers with refrigerated trailers, reducing the risk of load loss and simplifying compliance reporting.
- Track Time on Site: Customers can automate time-on-site reports using geofences and GPS data to provide accurate billing information and reduce the length of billing cycles.
Site Visibility
- Intelligent Site Visibility: Customers can leverage Samsara’s AI detection to identify workplace hazards and operational inefficiencies and respond to unusual activity.
- Proactive Alerts: SMS, email, and voice alarms help customers quickly deploy the right response to an incident.
- Mobile Access: Customers gain real-time remote visibility across all of their connected sites from an intuitive mobile app, enabling users to investigate incidents practically anytime and from any location.
Marketing Strategy of Samsara
We mentioned that Samsara has a subscription-based business model. Samsara primarily sells subscriptions to its Connected Operations Cloud to large, medium-sized, and small businesses through a direct sales motion supported by a field sales team and an inside sales team.
Samsara’s field sales team takes an account-based approach to target large multinational corporations. In contrast, Samsara’s inside sales team focuses on large, medium-sized businesses, and small businesses using both inbound and outbound sales techniques. Both teams are supported by a close partnership with Samsara’s marketing team’s lead generation engine.
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Samsara has a self-service model for smaller projects driven by a web store experience. Samsara’s free-trial sales business model strengthens Samsara’s go-to-market and sales efforts. Prospective customers are invited to test Samsara’s Connected Operations Cloud for their use case during a trial period at no cost.
This strategy helps Samsara’s technical sales team demonstrate the full capacity of Samsara’s Connected Operations Cloud while simultaneously reducing post-sales friction.
Samsara invests in various marketing activities and programs to drive awareness, engage with prospective customers, and build a pipeline for Samsara’s sales team. Samsara’s lead generation engine supports Samsara’s growth targets by leveraging customer success stories through field events, webinars, case studies, press engagement, and more.
Revenue Model
For the fiscal year ended February 3, 2024, Samsara’s revenue was $937.4 million, representing year-over-year growth of 44%. Samsara’s net loss was $286.7 million for the fiscal year ended February 3, 2024. Samsara’s business model focuses on maximizing the lifetime value of our customer relationships, and we continue to make significant investments to grow our customer base.
Samsara has a subscription-based business model. Samsara generates 98% of its revenue from subscriptions to the Connected Operations Cloud, which today includes Applications for video-based safety, vehicle telematics, apps and driver workflows, equipment monitoring, and site visibility.
The small remaining portion of the revenue comes from selling replacement IoT devices, including gateways, sensors, and cameras, as well as related shipping and handling fees and professional services.
A subscription to Samsara’s Connected Operations Cloud includes IoT data collection, which usually comes from a Samsara IoT device, such as an Internet gateway, camera, or sensor, or at times from a third-party solution; cellular connectivity for Samsara’s IoT devices; access to Samsara’s cloud Applications, APIs and the Samsara App Marketplace.
Samsara prices its 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. A five-building site with each building having one piece of equipment and using two Applications (equipment monitoring and site visibility) would count as ten subscriptions.
Samsara’s 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. As of February 3, 2024, Samsara 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”). While Samsara’s Connected Operations Cloud is accessible to customers of all sizes, it is particularly focused on larger customers representing over $100,000 in ARR. As of February 3, 2024, Samsara had 1,848 customers, each representing over $100,000 in ARR.
As of February 3, 2024, over 80% of our Core Customers and over 90% of our customers representing over $100,000 in ARR subscribed to multiple Applications.
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