Question: If a short-seller releases a scathing report alleging questionable accounting practices by one of the hottest software-as-a–service (SaaS) companies around and no one (except apparently us) writes about it, did it even happen? Back in September 2023, we analyzed a short report on Samsara (IOT) by Spruce Point Capital. The report claimed, among other things, that hardware sales make up a significant share of revenues, and also calls into question some of the metrics and customer diversification that Samsara boasts about as a SaaS company.
We always approach these short-seller reports with a healthy dose of skepticism. After all, the intention is to spook investors and knock down the share price, so firms like Spruce Point Capital can profit. Altruism as a motivating force is a distant second. And, indeed, Samsara stock dropped about 25% in the days following the report. And then … crickets. As far as we know, Samsara never addressed any of the allegations. Analysts completely ignored the Spruce Point dossier during the company’s Q3-2023 earnings presentation, during which it reported both quarterly and annual recurring revenue (ARR) growth of about 40%. Customers with ARR of more than $100,000 grew nearly 50%.
