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Query: If a short-seller releases a scathing report alleging questionable accounting practices by one of many hottest software-as-a–service (SaaS) firms round and nobody (besides apparently us) writes about it, did it even occur? Again in September 2023, we analyzed a brief report on Samsara (IOT) by Spruce Level Capital. The report claimed, amongst different issues, that {hardware} gross sales make up a major share of revenues, and in addition calls into query a number of the metrics and buyer diversification that Samsara boasts about as a SaaS firm.
We all the time method these short-seller experiences with a wholesome dose of skepticism. In any case, the intention is to spook traders and knock down the share worth, so companies like Spruce Level Capital can revenue. Altruism as a motivating drive is a distant second. And, certainly, Samsara inventory dropped about 25% within the days following the report. After which … crickets. So far as we all know, Samsara by no means addressed any of the allegations. Analysts utterly ignored the Spruce Level file throughout the firm’s Q3-2023 earnings presentation, throughout which it reported each quarterly and annual recurring income (ARR) development of about 40%. Prospects with ARR of greater than $100,000 grew practically 50%.
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