Samsara Inc. [IOT] Filings

10-Q 1 iot-20221029.htm FORM 10-Q iot-20221029

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 29, 2022


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-41140

SAMSARA INC.

(Exact name of registrant as specified in its charter)


Delaware						47-3100039
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1 De Haro Street San Francisco, California 94107
(Address of principal executive offices, including zip code)

(415) 985-2400

(Registrant’s telephone number, including area code)


Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.0001 par value per share

IOT

The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	o
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of November 29, 2022, there were 126,025,755 shares of the registrant’s Class A common stock, 392,850,088 shares of the registrant’s Class B common stock, and no shares of the registrant’s Class C common stock, each with a $0.0001 par value per share, outstanding.

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		Page
	Special Note Regarding Forward-Looking Statements	2
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets as of October 29, 2022 and January 29, 2022	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended October 29, 2022 and October 30, 2021	5
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Three and Nine Months Ended October 29, 2022 and October 30, 2021	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 29, 2022 and October 30, 2021	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	80
Item 3.	Defaults Upon Senior Securities	81
Item 4.	Mine Safety Disclosures	81
Item 5.	Other Information	81
Item 6.	Exhibits	82
SIGNATURES		83

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these terms or other comparable expressions that concern our expectations, strategy, plans, or intentions.

Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, other key business metrics and non-GAAP financial measures, our ability to determine reserves and our ability to achieve and maintain future profitability;

•the sufficiency of our cash, cash equivalents and investments to meet our liquidity needs;

•our expectations regarding future dividend payments or issuances of additional capital stock;

•our ability to attract, retain and expand our relationships with customers;

•our ability to develop new products, features, integrations, and enhancements for our solution;

•our ability to compete with existing and new competitors in existing and new markets and offerings;

•our ability to successfully acquire and integrate companies and assets;

•our ability to maintain the security and availability of our solution and business systems;

•our expectations regarding the effects and enforcement of existing and developing laws and regulations, including with respect to taxation and privacy and data protection, and the outcomes of litigation that we may from time to time become subject to;

•our expectations regarding the effects of the ongoing COVID-19 pandemic, the Russia-Ukraine conflict, geopolitical tensions involving China, and similar macroeconomic events, including global supply chain challenges, foreign currency fluctuations, elevated inflation and interest rates and monetary policy changes, upon our and our customers’ and partners’ respective businesses;

•our ability to successfully execute on strategic initiatives and manage risk associated with our business, including as we expand the scope of our business;

•our expectations regarding international expansion efforts;

•our expectations regarding our market opportunities and the evolution and growth of these markets and competition within these markets;

•our ability to develop and protect our brand;

•our expectations and management of future growth;

•our ability to hire, retain, and develop our employees;

•our expectations concerning relationships with third parties;

•our ability to maintain, protect and enhance our intellectual property;

•our ability to achieve and maintain carbon neutrality; and

•our anticipated tax withholding and remittance obligations in connection with restricted stock unit settlements.

Samsara Inc. (the “Company,” “Samsara,” “our” or “we”) cautions you that the foregoing list does not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

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You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations, estimates, forecasts, and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the outcome, future results, levels of activity or growth, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. The outcome of the events described in the forward-looking statements is subject to risks, uncertainties and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. Additionally, changes and volatility in political, economic or industry conditions, the interest rate environment, or financial and capital markets could result in changes in demand for products or services. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements contained in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are first made available. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q in conjunction with other documents that we file with the Securities and Exchange Commission (the “SEC”) and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this Quarterly Report on Form 10-Q by these cautionary statements.

Available Information

Our website address is located at samsara.com and our investor relations website is located at investors.samsara.com. We file electronically with the 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 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 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. Except as expressly set forth in this Quarterly Report on Form 10-Q, 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.

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.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

SAMSARA INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


	As of
	October 29, 2022		January 29, 2022
Assets
Current assets:
Cash and cash equivalents	$	447,040	$	921,218
Short-term investments	291,815		—
Accounts receivable, net	90,796		81,987
Inventories	44,501		33,067
Connected device costs, current	72,685		52,519
Prepaid expenses and other current assets	16,196		11,376
Total current assets	963,033		1,100,167
Restricted cash	23,096		23,092
Long-term investments	63,688		—
Property and equipment, net	57,358		36,772
Operating lease right-of-use assets	118,511		134,427
Connected device costs, non-current	180,120		141,292
Deferred commissions	128,212		117,757
Other assets, non-current	15,964		14,422
Total assets	$	1,549,982	$	1,567,929
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	43,366	$	54,705
Accrued expenses and other current liabilities	34,848		31,835
Accrued compensation and benefits	22,511		27,107
Deferred revenue, current	255,420		203,185
Operating lease liabilities, current	21,701		21,447
Total current liabilities	377,846		338,279
Deferred revenue, non-current	118,823		110,501
Operating lease liabilities, non-current	106,182		123,513
Other liabilities, non-current	7,378		6,689
Total liabilities	610,229		578,982
Commitments and contingencies (Note 9)

Stockholders’ equity:
Preferred stock, $0.0001 par value—400,000,000 shares authorized as of October 29, 2022 and January 29, 2022; zero shares issued and outstanding as of October 29, 2022 and January 29, 2022	—		—
Class A common stock, $0.0001 par value—4,000,000,000 shares authorized as of October 29, 2022 and January 29, 2022; 125,399,546 and 77,144,718 shares issued and outstanding as of October 29, 2022 and January 29, 2022, respectively	7		6
Class B common stock, $0.0001 par value—600,000,000 shares authorized as of October 29, 2022 and January 29, 2022; 393,473,497 and 428,331,442 shares issued and outstanding as of October 29, 2022 and January 29, 2022, respectively	23		23
Class C common stock, $0.0001 par value—1,200,000,000 shares authorized as of October 29, 2022 and January 29, 2022; zero shares issued and outstanding as of October 29, 2022 and January 29, 2022	—		—
Additional paid-in capital	2,055,481		1,909,964
Accumulated other comprehensive loss	(984)		(96)
Accumulated deficit	(1,114,774)		(920,950)
Total stockholders’ equity	939,753		988,947
Total liabilities and stockholders’ equity	$	1,549,982	$	1,567,929

See accompanying notes to condensed consolidated financial statements.

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SAMSARA INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended				Nine Months Ended
	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Revenue	$	169,800	$	113,819	$	465,968	$	302,593
Cost of revenue	47,253		31,781		131,128		85,778
Gross profit	122,547		82,038		334,840		216,815
Operating expenses
Research and development	49,970		29,687		132,802		78,668
Sales and marketing	94,056		58,704		273,347		166,569
General and administrative	41,997		24,399		127,098		72,157
Lease modification, impairment, and related charges	—		1,532		1,056		1,532

Total operating expenses	186,023		114,322		534,303		318,926
Loss from operations	(63,476)		(32,284)		(199,463)		(102,111)
Interest income and other income (expense), net	5,613		(143)		7,094		241
Loss before provision for income taxes	(57,863)		(32,427)		(192,369)		(101,870)
Provision for income taxes	692		19		1,455		387
Net loss	$	(58,555)	$	(32,446)	$	(193,824)	$	(102,257)
Other comprehensive income (loss), net of taxes:
Change in foreign currency translation adjustment	315		46		416		46
Change in unrealized gains (losses) on investments	(1,304)		—		(1,304)		—
Other comprehensive income (loss)	(989)		46		(888)		46
Comprehensive loss	$	(59,544)	$	(32,400)	$	(194,712)	$	(102,211)
Basic and diluted net loss per share:
Net loss per share attributable to common stockholders, basic and diluted	$	(0.11)	$	(0.13)	$	(0.38)	$	(0.42)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	516,551,258		246,811,235		511,867,718		246,174,612

See accompanying notes to condensed consolidated financial statements.

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SAMSARA INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share data)

(Unaudited)


	Three Months Ended October 29, 2022
	Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at July 30, 2022	—	$	—	514,366,270	$	29	$	2,009,323	$	5	$	(1,056,219)	$	953,138
Issuance of common stock for vesting of restricted stock units (“RSUs”)	—	—		4,219,328	1		—		—		—		1
Issuance of common stock under equity compensation plans	—	—		287,445	—		165		—		—		165
Vesting of early exercised stock options	—	—		—	—		75		—		—		75

Stock-based compensation expense	—	—		—	—		45,918		—		—		45,918
Other comprehensive loss	—	—		—	—		—		(989)		—		(989)
Net loss	—	—		—	—		—		—		(58,555)		(58,555)
Balance at October 29, 2022	—	$	—	518,873,043	$	30	$	2,055,481	$	(984)	$	(1,114,774)	$	939,753


	Three Months Ended October 30, 2021
	Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount
Balance at July 31, 2021	205,638,256	$	949,067	246,922,737	$	2	$	37,155	$	—	$	(635,737)	$	(598,580)




Issuance of common stock under equity compensation plans	—	—		1,391,649	—		376		—		—		376
Vesting of early exercised stock options	—	—		—	—		142		—		—		142
Repurchase of restricted common stock	—	—		(1,241)	—		(5)		—		—		(5)
Stock-based compensation expense	—	—		—	—		1,221		—		—		1,221
Other comprehensive income	—	—		—	—		—		46		—		46
Net loss	—	—		—	—		—		—		(32,446)		(32,446)
Balance at October 30, 2021	205,638,256	$	949,067	248,313,145	$	2	$	38,889	$	46	$	(668,183)	$	(629,246)

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SAMSARA INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)—CONTINUED

(In thousands, except share data)

(Unaudited)


	Nine Months Ended October 29, 2022
	Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at January 29, 2022	—	$	—	505,476,160	$	29	$	1,909,964	$	(96)	$	(920,950)	$	988,947
Issuance of common stock for vesting of RSUs	—	—		10,711,083	1		—		—		—		1
Issuance of common stock under equity compensation plans	—	—		2,686,238	—		10,877		—		—		10,877
Vesting of early exercised stock options	—	—		—	—		253		—		—		253
Repurchase of restricted common stock	—	—		(438)	—		—		—		—		—
Stock-based compensation expense	—	—		—	—		134,387		—		—		134,387
Other comprehensive loss	—	—		—	—		—		(888)		—		(888)
Net loss	—	—		—	—		—		—		(193,824)		(193,824)
Balance at October 29, 2022	—	$	—	518,873,043	$	30	$	2,055,481	$	(984)	$	(1,114,774)	$	939,753


	Nine Months Ended October 30, 2021
	Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount
Balance at January 30, 2021	205,638,256	$	949,067	245,985,471	$	1	$	33,122	$	—	$	(565,926)	$	(532,803)




Issuance of common stock under equity compensation plans	—	—		2,335,940	1		1,264		—		—		1,265
Vesting of early exercised stock options	—	—		—	—		520		—		—		520
Repurchase of restricted common stock	—	—		(8,266)	—		(5)		—		—		(5)
Stock-based compensation expense	—	—		—	—		3,988		—		—		3,988
Other comprehensive income	—	—		—	—		—		46		—		46
Net loss	—	—		—	—		—		—		(102,257)		(102,257)
Balance at October 30, 2021	205,638,256	$	949,067	248,313,145	$	2	$	38,889	$	46	$	(668,183)	$	(629,246)

See accompanying notes to condensed consolidated financial statements.

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SAMSARA INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	October 29, 2022		October 30, 2021
Operating activities
Net loss	$	(193,824)	$	(102,257)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	8,350		8,217
Stock-based compensation expense	133,490		3,988




Lease modification, impairment, and related charges	1,056		1,532

Other non-cash charges	3,336		5,428
Changes in operating assets and liabilities:
Accounts receivable, net	(13,297)		(23,685)
Inventories	(11,434)		(8,635)
Prepaid expenses and other current assets	(5,300)		(1,819)
Connected device costs	(58,993)		(62,433)
Deferred commissions	(10,455)		(14,770)
Other assets, non-current	(1,520)		(939)
Accounts payable and other liabilities	(9,398)		35,468
Deferred revenue	60,557		36,825
Operating lease liabilities, net	(1,216)		(96)
Net cash used in operating activities	(98,648)		(123,176)
Investing activities
Purchase of property and equipment	(27,237)		(9,953)
Purchases of investments	(355,730)		—


Investing other	432		(582)
Net cash used in investing activities	(382,535)		(10,535)
Financing activities



Proceeds from issuance of common stock in connection with equity compensation plans	10,868		965
Proceeds from early exercise of stock options	—		152
Repurchase of restricted common stock	—		(5)



Payment of offering costs	(2,532)		(2,160)
Payment of principal on finance leases	(856)		(336)
Net cash provided by (used in) financing activities	7,480		(1,384)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	(471)		46
Net decrease in cash, cash equivalents, and restricted cash	(474,174)		(135,049)
Cash, cash equivalents, and restricted cash, beginning of period	944,310		434,309
Cash, cash equivalents, and restricted cash, end of period	$	470,136	$	299,260
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	315	$	168
Supplemental disclosures of non-cash investing and financing activities:
Property and equipment accrued but not yet paid	$	1,081	$	1,254
Stock option exercises in transit	$	1	$	122

Unpaid offering costs	$	—	$	935
Vesting of early exercised stock options	$	253	$	520

See accompanying notes to condensed consolidated financial statements.

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SAMSARA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business

Samsara Inc. (“Samsara”) and its subsidiaries (collectively, the “Company”) are the pioneers of the Connected Operations Cloud, which allows businesses that depend on physical operations to harness Internet of Things (“IoT”) data to develop actionable business insights and improve their operations. Samsara was incorporated in Delaware in 2015 as Samsara Networks Inc. and changed its name to Samsara Inc. in February 2021. Samsara’s principal executive offices are located at 1 De Haro Street, San Francisco, California 94107.

2. Summary of Significant Accounting Policies

Basis of Presentation and Fiscal Year—The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022, which was filed with the SEC on March 30, 2022.

In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of October 29, 2022 and the results of operations for the three and nine months ended October 29, 2022 and October 30, 2021, and cash flows for the nine months ended October 29, 2022 and October 30, 2021. The condensed consolidated balance sheet as of January 29, 2022 was derived from the audited financial statements but does not include all disclosures required by GAAP. The results of operations for the three and nine months ended October 29, 2022 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.

The Company’s fiscal year is a 52- or 53-week period ending on the Saturday closest to February 1. Fiscal year 2023 consists of 52 weeks and fiscal year 2022 consisted of 52 weeks. Every sixth fiscal year is a 53-week year. Fiscal year 2024 is the Company’s next 53-week fiscal year, with the fourth quarter consisting of 14 weeks.

Principles of Consolidation—The condensed consolidated financial statements include the accounts of Samsara and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates—The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, the fair value of stock-based awards, internal-use software development costs, sales return reserve, accrued liabilities and contingencies, depreciation and amortization periods, lease modification, impairment, and related charges, and accounting for income taxes. Actual results could materially differ from the estimates and assumptions made.

Significant Accounting Policies—There were no material changes to the Company’s significant accounting policies during the nine months ended October 29, 2022, except for the addition of the accounting policy for the Company’s investments.

Investments—The Company’s investments in marketable debt securities have been classified and accounted for as available-for-sale and are recorded at estimated fair value. The Company determines the appropriate classification of investments at the time of purchase and reevaluates such determination at each balance sheet date and classifies its marketable debt securities as either short-term or long-term based on their remaining contractual maturities. Short-term investments are investments with original or remaining maturities of one year or less at each balance sheet date. Purchase premiums and discounts are amortized or accreted using the effective interest method over the life of the related security and such amortization and accretion are included in “Interest income and other income (expense), net” on the condensed consolidated statements of operations and comprehensive loss.

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For available-for-sale securities in an unrealized loss position, the Company first assesses whether it intends to sell or it is more likely than not that the Company will be required to sell the security before the recovery of its entire amortized cost basis. If either of these criteria is met, the security’s amortized cost basis is written down to fair value through “Interest income and other income (expense), net” on the condensed consolidated statements of operations and comprehensive loss. If neither of these criteria is met, the Company further assesses whether the decline in fair value below amortized cost is due to credit or non-credit related factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and any adverse conditions specifically related to the security, among other factors. Credit-related unrealized losses are recognized as an allowance on the condensed consolidated balance sheets with a corresponding charge in “Interest income and other income (expense), net” on the condensed consolidated statements of operations and comprehensive loss. Non-credit related unrealized losses and unrealized gains on available-for-sale securities are included in accumulated other comprehensive income (loss).

Realized gains and losses are determined based on the specific identification method and are reported in “Interest income and other income (expense), net” on the condensed consolidated statements of operations and comprehensive loss. See Note 4, “Fair Value Measurements,” for information regarding the fair value of the Company’s investments in marketable debt securities.

Recently Adopted Accounting Pronouncements—There were no new accounting pronouncements adopted during the nine months ended October 29, 2022.

Recent Accounting Pronouncements Not Yet Adopted—In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments in this update represent changes to clarify, correct errors in, or improve the codification. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326). The amendments in this update provide entities that have certain instruments within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost, with an option to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments—Overall, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of Topic 326. This guidance is effective for the Company for its fiscal year beginning January 29, 2023. The standard requires a modified retrospective method of adoption. This new standard is not expected to have a material impact on the Company’s consolidated financial statements.

The Company has reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a material impact on the Company’s consolidated financial statements.

3. Cash, Cash Equivalents, Restricted Cash, and Investments

As of October 29, 2022 and January 29, 2022, cash and cash equivalents consist of cash deposited with banks and money market funds, and all highly liquid investments with an original or remaining maturity of three months or less when purchased. As of October 29, 2022, short-term and long-term investments in marketable debt securities consist of U.S. government and agency securities, corporate notes and bonds, commercial paper, and money market funds.

Restricted cash as of October 29, 2022 and January 29, 2022 consists of letters of credit secured as collateral on the Company’s office space leases. Total cash, cash equivalents, and restricted cash consist of the following (in thousands):


	As of
	October 29, 2022		January 29, 2022
Cash and cash equivalents	$	447,040	$	921,218
Restricted cash	23,096		23,092
Total cash, cash equivalents, and restricted cash	$	470,136	$	944,310

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The following is a summary of the Company’s cash equivalents and available-for-sale marketable debt securities recorded within short-term and long-term investments on the condensed consolidated balance sheets (in thousands):


	As of
	October 29, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Cash equivalents:
Money market funds	$	37,282	$	—	$	—	$	37,282
Commercial paper	211,820		—		(18)		211,802
U.S. government and agency securities	41,893		1		(14)		41,880
Corporate notes and bonds	4,998		—		(4)		4,994
Total cash equivalents	$	295,993	$	1	$	(36)	$	295,958

Investments:
Commercial paper	134,467		—		(14)		134,453
Corporate notes and bonds	112,757		5		(605)		112,157
U.S. government and agency securities	$	109,548	$	6	$	(661)	$	108,893
Total investments	$	356,772	$	11	$	(1,280)	$	355,503

The Company included $1.0 million of interest receivable in “Prepaid expenses and other current assets” on the condensed consolidated balance sheets as of October 29, 2022.

For available-for-sale marketable debt securities with unrealized loss positions, the Company does not intend to sell any of the securities and the Company considers it more likely than not that the Company will hold these securities until a recovery of the cost basis, which may not occur until maturity. The Company did not recognize an allowance for credit losses on these securities as of October 29, 2022 because such potential losses were not material.

As of October 29, 2022, the contractual maturities of the Company’s investments did not exceed 24 months. The estimated fair values of available-for-sale marketable debt securities, by remaining contractual maturity, are as follows (in thousands):


	As of
	October 29, 2022
Due within one year	$	291,815
Due in one year to two years	63,688

Total	$	355,503

There were no material realized or unrealized gains or losses, either individually or in the aggregate, during the three and nine months ended October 29, 2022.

Concentrations of Credit Risk—The Company maintains its investments in marketable debt securities with high-quality financial institutions with investment-grade ratings.

4. Fair Value Measurements

The Company reports all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1—Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices in active markets for identical assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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Level 3—Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement in its entirety.

The condensed consolidated financial statements as of October 29, 2022 and January 29, 2022 do not include any nonrecurring fair value measurements relating to assets or liabilities.

The following tables present the fair value hierarchy for the Company’s assets measured at fair value on a recurring basis as of the periods presented (in thousands):


	As of October 29, 2022
	Level 1		Level 2		Level 3		Total
Cash equivalents and restricted cash:
Cash equivalents
Money market funds	$	160,378	$	—	$	—	$	160,378
Commercial paper	—		211,802		—		211,802
U.S. government and agency securities	—		41,880		—		41,880
Corporate notes and bonds	—		4,994		—		4,994
Restricted cash—letters of credit	23,096		—		—		23,096
Total cash equivalents and restricted cash	$	183,474	$	258,676	$	—	$	442,150

Marketable debt securities:
Commercial paper	$	—	$	134,453	$	—	$	134,453
Corporate notes and bonds	—		112,157		—		112,157
U.S. government and agency securities	—		108,893		—		108,893
Total marketable debt securities	$	—	$	355,503	$	—	$	355,503


	As of January 29, 2022
	Level 1		Level 2		Level 3		Total
Cash equivalents—money market funds	$	866,364	$	—	$	—	$	866,364
Restricted cash—letters of credit	23,092		—		—		23,092
Total cash equivalents and restricted cash	$	889,456	$	—	$	—	$	889,456

The Company determines the fair value of its security holdings based on pricing from the Company’s service providers and market prices from industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures.

There were no transfers between Level 1 or Level 2, or transfers in or out of Level 3 of the fair value hierarchy during the nine months ended October 29, 2022 and October 30, 2021.

5. Costs to Obtain and Fulfill a Contract

Deferred Commissions—Total deferred commissions as of October 29, 2022 and January 29, 2022 was $128.2 million and $117.8 million, respectively.

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The following table provides the amounts capitalized and amortized for the Company’s commission costs for the periods presented (in thousands):


	Three Months Ended				Nine Months Ended
	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Capitalized commission costs	$	16,599	$	17,401	$	47,442	$	48,979
Amortization expense	12,477		11,982		36,987		34,210

Connected Devices—Total connected device costs, which the Company also refers to as IoT device costs, current and non-current as of October 29, 2022 and January 29, 2022 was $252.8 million and $193.8 million, respectively.

The following table provides the amounts capitalized and amortized for the Company’s connected device costs for the periods presented (in thousands):


	Three Months Ended				Nine Months Ended
	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Capitalized connected device costs	$	39,244	$	31,051	$	105,014	$	89,979
Amortization expense	17,048		10,672		46,020		27,545

6. Property and Equipment, Net

Property and equipment, net, comprises the following (in thousands):


	As of
	October 29, 2022		January 29, 2022
Gross property and equipment
Computers and equipment	$	1,206	$	834
Leasehold improvements	45,982		24,752
Furniture and fixtures	19,765		16,854
Internal-use software development costs (1)	20,706		16,152
Total gross property and equipment	87,659		58,592
Accumulated depreciation and amortization (2)	(30,301)		(21,820)
Property and equipment, net	$	57,358	$	36,772

__________

(1)The Company’s internal-use software development costs included $0.5 million and $1.1 million of stock-based compensation costs for the three and nine months ended October 29, 2022, respectively, and an immaterial amount of stock-based compensation costs for the three and nine months ended October 30, 2021. The following table provides the amounts capitalized and amortized for the Company’s internal-use software development costs for the periods presented (in thousands):


	Three Months Ended				Nine Months Ended
	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Capitalized internal-use software development costs	$	2,003	$	1,310	$	4,554	$	3,226
Amortization expense	$	934	$	856	$	2,911	$	2,398

Internal-use software development costs, net, as of the periods presented was as follows (in thousands):


	As of
	October 29, 2022		January 29, 2022
Internal-use software development costs, net	$	8,168	$	6,747

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(2)The following table presents the depreciation and amortization of property and equipment, excluding the accelerated depreciation expense of $29.7 million recorded in connection with the lease modification during the three and nine months ended October 30, 2021, which is included in “Lease modification, impairment, and related charges” on the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):


	Three Months Ended				Nine Months Ended
	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Depreciation and amortization expense	$	3,345	$	512	$	8,350	$	5,819

7. Leases

The Company leases office space under operating lease agreements that are non-cancelable (subject to limited termination rights). These leases have remaining lease terms ranging from one year to 10 years. The Company is required to pay property taxes, insurance, and normal maintenance costs for certain of these facilities, and will be required to pay any increases over the base year of these expenses on the remainder of the Company’s facilities.

The Company impaired and ceased using leased office spaces for which the Company recorded $1.1 million of expense in “Lease modification, impairment, and related charges” for the nine months ended October 29, 2022.

The components of operating lease expense were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Operating lease cost	$	6,333	$	6,146	$	19,096	$	17,686
Short-term lease cost	172		45		486		157
Sublease income	(195)		(75)		(581)		(75)
Total lease cost	$	6,310	$	6,116	$	19,001	$	17,768

Supplemental information related to operating leases was as follows (in thousands, except for weighted-average data):


	Three Months Ended				Nine Months Ended
	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Cash paid for amounts in the measurement of operating lease liabilities—operating cash flows	$	6,725	$	8,418	$	20,017	$	18,856
Operating lease ROU assets obtained in exchange for new operating lease liabilities	$	—	$	19,135	$	—	$	19,135

In the second quarter of fiscal year 2023, the Company relocated from its former corporate headquarters to its new corporate headquarters. During the nine months ended October 29, 2022, the Company recorded no additional operating leases and had a reduction of right-of-use (“ROU”) assets associated with a lease impairment of $1.0 million.


	As of
	October 29, 2022		January 29, 2022
Weighted-average remaining lease term—operating leases (in years)	6.6		7.1
Weighted-average discount rate—operating leases	4.49	%	4.38	%

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Future minimum lease payments included in the measurement of operating lease liabilities as of October 29, 2022 were as follows (in thousands):


Fiscal Years Ending	Amount
Remainder of 2023	$	6,772
2024	26,853
2025	26,850
2026	19,946
2027	14,236
2028 and thereafter	56,239
Total future minimum lease payments (1)	150,896
Less: imputed interest	(23,013)
Total operating lease liabilities	$	127,883

__________

(1)The contractual commitment amounts under operating leases in the table above are primarily related to facility leases for the Company’s corporate office facilities in San Francisco, California, which was completed in the second quarter of fiscal year 2023, as well as other offices for the Company’s local operations. The table above does not reflect obligations under contracts that the Company can cancel without a significant penalty, the Company’s option to exercise early termination rights, or the payment of related early termination fees.

In addition to its operating leases, the Company has entered into non-cancelable finance leases for equipment beginning in 2020. The balances for finance leases were recorded in “Other assets, non-current,” “

Samsara Inc. [IOT] Filings
10-Q	[2022-12-06]
10-Q	[2022-09-06]
10-Q	[2022-06-08]
10-K	[2022-03-30]
S-1	[2021-11-19]