The best stocks in your portfolio are those that require the least attention. Software-as-a–service (SaaS) stocks are low maintenance because most provide the same metrics to assess business health. Annual recurring revenues (ARR) are the foundation of every SaaS firm and represent two growth components – existing customers that pay more over time, and revenues from new customers. The former is measured using net retention rate (NRR), a key metric that shows how effective salespeople are in upselling / cross-selling to existing customers. When a company stops reporting their NRR numbers, it’s cause for concern. That brings us to the topic of today’s analysis – Samsara (IOT).
Samsara Key SaaS Metrics
In the past we’ve praised Samsara as an exemplary SaaS firm because of all the metrics they provide and the strength of those metrics. It’s time for our annual check in with the company, and NRR is nowhere to be found. In the latest earnings call, an analyst asked about NRR to which the company responded.
Q2 dollar-based net retention rate for core ($5K+ ARR) and large ($100K+ ARR) customers remained above our targets of 115% and 120%, respectively
Credit: Samsara
The absence of this basic metric is puzzling because it forces us to look other places to ensure their solution is sticky. Fortunately, the company provides us with “revenue bucket” metrics that show expansion progress. For example, 1,
