{ "docId": "019dd923-622c-750b-8b99-6d840c1e7ff2", "docSlug": "70f833659b03", "documentTitle": "Samsara Inc. (IOT)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Capital Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2023-09-21 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 32, "pageCount": 88, "prevPage": 31, "nextPage": 33, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 0, "notes": "Uses a comparison with Fleetmatics to highlight a potential accounting discrepancy.", "elementsJson": [ "headline_text", "paragraph", "callout_box", "quote_block" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-6d840c1e7ff2/32", "deckHref": "/decks/019dd923-622c-750b-8b99-6d840c1e7ff2", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-6d840c1e7ff2.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-6d840c1e7ff2#slide-32", "components": [ { "bbox": { "h": 0.04, "w": 0.96, "x": 0.02, "y": 0.28 }, "kind": "callout", "text": "Evidence of Frequent Hardware Upgrades / Replacements", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9ba0db7f-0b68-45b7-8d36-a6b26dcab415", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.96, "x": 0.02, "y": 0.66 }, "kind": "callout", "text": "Even Fleetmatics Clearly Disclosed Its Accounting Policy Regarding Device Amortization For Churned Customers", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c174d1a6-de37-4279-80df-350da51e043c", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "Based on this description of the level of replacement activity, a material portion of capitalized device costs from contracts struck from 2018 to 2021 would need to be written off, yet Samsara's S-1 contains no such disclosure.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-0f1a-773e-97f4-45fb9b33f4ba", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.96, "x": 0.02, "y": 0.17 }, "kind": "paragraph", "text": "Samsara's lack of disclosure suggests the Company may not be properly writing off connected device costs. Several former employees noted rapid device replacement activity pre-IPO, yet the S-1 contains no mention of write-offs.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "464acbfa-d3a9-4130-a36b-c7890b29bb84", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.96, "x": 0.02, "y": 0.83 }, "kind": "paragraph", "text": "Why doesn't Samsara provide similar disclosure regarding their accounting policy related to capitalized device costs when customers churn? We believe Samsara's churn is elevated given its SMB-heavy customer base.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "913a13f7-feea-4deb-a18c-5431f52e8221", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.96, "x": 0.02, "y": 0.56 }, "kind": "paragraph", "text": "Based on this description of the level of replacement activity, a material portion of capitalized device costs from contracts struck from 2018 to 2021 would need to be written off, yet Samsara's S-1 contains no such disclosure.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f2298208-2db1-4c86-b8ac-eecc02f22cd0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.96, "x": 0.02, "y": 0.71 }, "kind": "quote", "text": "If a customer subscription agreement is canceled or expires prior to the end of the expected useful life of the device under contract, the depreciation period is accelerated resulting in the carrying value being expensed.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0fab4ec7-0541-4969-808a-8fbaf4dba6b4", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.73, "x": 0.25, "y": 0.33 }, "kind": "quote", "text": "So they have many different models out... rapidly upgrading... they're essentially treating the hardware kind of like software. They're upgrading that pretty frequently and making sure the customers have the latest.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "410fc5ac-44cd-48e2-a5dd-4ed7bacd8c5f", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"So they have many different models out, both camera models and vehicle telematics models. So then rapidly upgrading which maybe is a little bit different compared to what this industry is used to, but they are essentially sort of like rapidly upgrading...So they are constantly upgrading and improving their hardware because like they're innovating very rapidly...So I think that's (a) headwind because, like I said earlier, they're essentially treating the hardware kind of like software. They're upgrading that pretty frequently and making sure the customers have the latest.\" — Tegus Interview with Former Samsara Senior Finance Manager, 11/16/22", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-0f1a-773e-97f4-48f1abe734fb", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.4, "x": 0.02, "y": 0.96 }, "kind": "source-note", "text": "Source: Tegus, Fleetmatics Q3 2016 10-Q, Spruce Point Research", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "db071de4-39b1-4814-9c4d-63b5fcadb4a3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.65, "x": 0.31, "y": 0.03 }, "kind": "title", "text": "Has Samsara Properly Accounted For Connected Device Cost Write-Offs?", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "48d75536-994f-4e5f-bb79-75edeaa7fa9a", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "60850b97-1222-46a1-aded-775ed7ee09fb", "evidence": "Highlights lack of disclosure regarding potential write-offs compared to industry peers.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }