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I’d like to buy you a beer if you live in the Bay Area on Thursday May, 14th.
Come hang with fellow Mostly Metrics readers.
I’ll be telling my favorite renewal rate jokes and I’ve asked the bar to play an eclectic mix of 80’s Joel and deep cuts from Creed’s second album.
Can’t wait to meet you IRL.
How Samsara Matured It’s Forecasting from Private to Public
Dominic Phillips is the CFO of Samsara, a company growing ~30% y/y with ~20% EBITDA Margins. As a perennial Rule of +40 company, they have one of the more beautiful P&L’s amongst software players.
Source: Samsara Q4 2026 Investor Presentation
The following is a lesson in capital allocation, budgeting, and reforecasting that is useful for any industry.
Dominic joined ServiceNow after a stint in investment banking at Morgan Stanley, where he helped the company go public as an advisor. After joining, he ran Investor Relations, Corporate Development, and later FP&A under GOAT CFO Mike Scarpelli (who later went on to become Snowflake’s CFO).
In that role he learned how to forecast at an incredibly accurate level for a publicly traded company. And he carried many of the methodologies and frameworks with him to Samsara when he became CFO.
But when he arrived at Samsara, the company was still young and inexperienced when it came to managing a budget. They were well over $100M in revenue, and growing like crazy, but not everyone in the C Suite had held a budget envelope before, and there was no formal annual planning process.
“When I joined Samsara, we didn't have an annual planning process. We didn't do BVA's budget versus actuals at the end of the quarter. There was very little communication with each of the business functions”
While it was a big change from where he came from, he added:
“It's important to understand and appreciate where your org is today from a maturity standpoint, but also have a really strong view of, where does this need to go and what are you building toward?”
And over several years, on their way to an IPO, they greatly matured that process.
“I'm really glad we actually had a couple of years before we went public when I joined to really build out that rigor before we got into being a public company.”
What we’ll discuss today is how Samsara thinks about:
Capital Allocation
Annual Planning
Reforecasting
Here’s how they do it (with great success) today.
Capital Allocation
Planning, at its core, is putting capital to its best marginal use. Samsara puts the highest amount of capital towards Sales and Marketing, which has fueled multiple years of +30% y/y growth at scale.
Source: Samsara Q4 2026 Investor Presentation
“For the most part, we allocate high 30% of our revenue to sales. This is a sales and marketing led organization, very similar to ServiceNow, top down, direct sales motion. Those dollars clearly have the most direct impact on bookings, and that's why it ultimately drives the largest investment.
For those go-to-market dollars, we're looking at investing in really large TAMs, really large market opportunities where we think we've got a strong ability to win.”
The next biggest bucket is R&D, where they invest high teens to 20% of revenue. Within that bucket they get even more specific as to what those dollars drive on the roadmap between near term and long term products:
“Here we use an investment horizon framework. So we're really trying to make sure that about 70% of the R&D dollars for this year are spent on this year's product roadmap, but that we're saving about 30% of those dollars for medium and longer term product bets.
So we're thinking out multiple investment horizons.”
The remainder goes to G&A, which is an area that over time has really provided the company a lot more leverage as they’ve scaled.
“We use, I would say, a hybrid of zero-based budgeting and run rate plus incremental.“
At Samsara, some of their functions and organizations are mature enough where they're doing full zero-based budgeting every year, bottoms up. And in other cases, they’re pushing functions to reduce their run rate with savings, to fund some of their new initiatives before they will deploy incremental dollars into those functions.
What I like most about this hybrid approach is they are meeting each department where they are in their maturity cycle. Plus, they have FP&A analysts embedded throughout the org so they know if they actually need to start from zero or not.
If we’re being honest, some stuff just needs to roll forward, so don’t over engineer it and run a process for the sake of the process, rather than the outcome.
This capital allocation framework informs how they do annual planning.
Annual Planning:
Samsara starts with a 1,000 day strategy. This is what many other companies call their 3 year plan. This helps them think about both the short term and medium term all at once.
They ask themselves:
What are our larger sales initiatives?
What countries do we want to be in?
Do we want to add more product or vertical specific specialists?
What is the three year R&D roadmap going to look like?
Once they feel good about that, they lop off the the last two years and go deep on the next year (one year planning).
To kick this leg of the process off, they set their operating principles:
“For us, that is we want to demonstrate some amount of year over year leverage. We want to get a little more efficient, and we want to be operating at rule of 40 or better on an annual basis. And then within those two guardrails, we're trying to grow as fast as we can.”
This starts with setting top line targets. There’s a big triangulation between finance, sales, and R&D to get this right.
They’re looking at a bunch of internal data points:
What does the product roadmap look like?
How much pipe can we generate?
How much sales capacity can we add?
How is that capacity ramping over time?
How productive are those reps expected to be?
This is where they lean on external benchmarking to see what “good” looks like for other publicly traded companies of their scale.
They also try to take into account macro signals that may push these benchmarks up or down in the near future:
What do the competitive dynamics look like?
Are we seeing any changes in the economy?
After they debate and set topline targets, they set profitability targets, getting more specific on margins.
Source: Samsara Q4 2026 Investor Presentation
“All of our margins, again, are based on our operating principles.
And then the difference between the top down, top line metrics and these margins is the amount of money that we're going to spend and allocate for that year.”
This topline budget is done in tandem with the functional bottoms up planning process they complete across all the different groups. They ask what’s required to achieve the top line targets they recently set. And then they work with the business units to finalize the plan.
“We try to have a really solid draft done by the end of Q3, and then we really are using Q4 to make tweaks based on new information that you're learning in the final quarter of the year.”
Reforecasting:
Source: Samsara Q4 2026 Investor Presentation
So the annual budget gets set once per year at the start of the year. Then they perform a reforecasting cadence at both the monthly and quarterly levels. Here’s how it goes down:
After each quarter ends they reforecast the remainder of the year
After Q2 actuals, they reforecast Q3 and Q4
So they are reforecasting the annual plan continuously
Then, within each quarter, they do a reforecast of that quarter after each month
After April in Q2 they reforecast May and June
So you’re constantly trying to take the inputs from the actuals and get closer to the pin
“Three, Two, One” Accuracy:
“We do this three, two, one accuracy. Basically, after the first month of actuals, you want to be within 3% of what actually happens at the end of the quarter.
“After month two, you should be getting closer because you've got two months of actuals, you should be within 2% of the actuals.”
“And by the end in that last forecast, you should try to be across all of the forecastable areas within 1% of what actually happens.”
Dominic says this is driven by three forecasting principles:
Build towards accuracy: Forecast accuracy is critical for managing external expectations
Refine and reforecast regularly: The business is changing. It's important to be dynamic. As new information comes in, things need to change and it's important to be nimble and be able to reforecast really quickly.
Heavily engage the business: Build really good relationships with the business functions
I want to talk about this third point in greater detail.
To engage the business well you need to make sure you're closing the feedback loop with leaders. They need to understand what missed and why it missed. That sets you up to get more information from them down the line so that again, you can go back to that first point where you're building toward accuracy.
I've personally made this mistake in my career - going out and asking people for inputs for my model, but then I never went back and told them how things went. It became a one way dialogue. And that’s not fair. You've got to complete the convo so they can learn from it as well.
“The feedback loop is at the core of the partnership. If you're doing this really, really well, they should think about FP&A as their business partner. They have their HR business partner sitting in their staff meeting, as well as their finance business partner. If they're adding a lot of value and they're plugged into the business. And so that's the type of relationships that we're looking for.”
Crawl, Walk, Run
To tie this all back to where we started, Dominic made it very clear that they had to crawl, walk, then run.
You can’t over club it at first. I’ve worked at companies where the person I was dealing with had never had a budget before (not even a travel budget).
I've also worked at companies where we were forecasting everything down to allocating rent for the CMO, something that they can't even impact.
So you need to know your stage.
“It's okay to, again, know where you are in the journey, but with the view of where you want it to go.”
And if you take nothing else from this, remember to let people know what happened. Whether you’re actively allocating capital, planning, or reforecasting, it’s a team sport. Don’t just go to them with questions. Go back to them with updates. It’s how a living organism, which what a company really is, gets better at pacing itself. And it doesn’t take a public company earnings call to optimize that motion.
Quote I’ve Been Pondering
“New England managed continuously to beat opponents by slim margins.
Together, those margins and their consistency added up to a gap.”
Wishing you a forecasting process that doesn’t feel like a slow march through Hell,
CJ
