Samsara Inc. is expected to price shares of its initial public offering on Tuesday and trade the following day as it hopes to get a share of an estimated $55 billion market to digitize the operations of non-tech companies.
The stock will start trading on Wednesday under the ticker IOT on the New York Stock Exchange. Morgan Stanley, Goldman Sachs, JPMorgan and Allen Co. are among the underwriters.
The company estimated last week that it's shares would be valued at up to $11.5 billion, based on estimates between $20 and $23 apiece.
Samsara founded in 2015 and allows businesses to use Internet-of- Things connected devices that can range from video cameras to data-collecting equipment to run operations. Here are five things to look for:
In its S- 1 filing with the Securities and Exchange Commission, the company said that it targets industries not already swept up in digital transformation 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.
The total addressable market will be around $54.6 billion by the end of 2021, and $96.9 billion by the end of 2024, according to the company.
Samsara estimates that there will be $32.9 billion market in 2021 and $63.7 billion in 2024 for telematics alone - or monitoring cars and trucks, or other mobile equipment.
The platform was used by a large freight carrier, a large city government, a waste transportation company, and a crane, rigging and heavy transport company. Co-founder and chief executive John Bicket and Sanjit Biswas, co-founder and chief executive, said in a founders letter that connected devices are now everywhere in our personal lives, it may surprise you to learn how much pen-and-paper is still being used in the industries that keep our planet running.
They said that the industries that we serve account for more than a third of the global economy, and it is easy to imagine a future when every asset has a chip in it and is connected to the cloud.
ARR has grown 68% and revenue is on track for 78% growth.
Samsara reported annual revenue, or ARR, of $492.8 million, compared to $293.1 million a year ago. ARR is a metric that is often used by software-as-a-service companies to show how much revenue the company can expect based on subscriptions.
As of October 30th, 13,000 core customers account for $5,000 or more ARR. Samsara said that the number of customers that pay more than $100,000 for services went up 83% to 715 compared to 390 a year ago.
The company reported revenue of $249.9 million for the year ending January 30, 2021, compared with $119.9 million and a loss of $225.2 million in the previous year.
For the nine months ending October 30, Samsara reported revenue of $302.6 million, a loss of $174 million, and a loss of $174 million. About 15% of the proceeds go to restricted stock settlements.
Samsara said in its filing that expected proceeds of $819.9 million will go to generic things like operations and to create a public market for its stock, but a significant portion of the IPO money is going to settle restricted stock units.
A midpoint pricing estimate of $21.50 a share will lead to a restricted stock unit settlement, which will result in about $124.2 million in proceeds. The settlement involves anticipated tax withholding and remittance obligations and an assumed 33.6% tax withholding rate, according to the company.
Competitors are not direct but offer specific services that Samsara offers via suite.
Samsara said no company competes with its cloud suite of operations toe-to-toe.
Vendors like Verizon Communications Inc.'s VZ, Verizon Connect and Geotab offer driver management and GPS tracking tools, and Motorola Solutions Inc.'s MSI, Avigilon specializes in video analytics, AI and network video management software.
Samsara lists Amazon.com Inc. AMZN as a potential rival and that could spell trouble.
Samsara said in the filing that we rely upon Amazon for AWS web hosting and we do not currently have an alternative provider. If Amazon decides to compete with us and does not allow us to renew our commercial agreement, this may have a significant impact on our solution and would require us to allocate time and expense to setting up our Connected Operations Cloud on an alternative hosting service. The offer is for shares of Class A stock, which get one vote per share, unlike Class B shares that get 10 votes per share.
Early backers of the company command a majority stake in the company, and therefore majority voting power, has been a main reason for many IPOs of late. That is not the case with Samsara.
According to Crunchbase data, the company raised $930 million in funding prior to the IPO. Of those early investors, Andreessen Horowitz will have 17.5% of the votes after the offering, while General Catalyst has 9.7% of the votes.
CEO Biswas retains 24.8% of the votes, while co-founder Bicket retains 24.3%.