Very interesting read, couldn’t agree more with the description of VMS’ moat and structural importance in the age of AI models, ie “garbage in, garbage out”.
Aptitude Software Group plc comes to mind - mission-critical software enabling AI, trading at 10x FCF with activist ownership from L6 Holdings and Pinetree Capital (the Leonard family)!
A wonderful read. I immediately looked up "top companies who created a moat with purpose-built b2b software enhanced by AI" and came up with a list that included two of my existing watchlist stocks, TEM and IOT.
I took a cursory look at both. I didn't dig any deeper because they don't currently meet my investment criteria. That's not to say that they aren't good for others, but they just don't fit my portfolio,
Samsara is still pre-profit, although moving closer to profitability. I tend not to invest in companies that have not yet evidenced sustainable profitability. In a few years from now they may look more interesting to me. I may have missed some of the early upside, but I focus on risk adjusted returns and so would rather pay a higher price for a lower risk profile.
Stock based compensation is something else that needs to be carefully monitored. The sums are not insignificant and external shareholders are being diluted. Be careful about any free cash flow numbers that are calculated with stock based compensation as a deductable non-cash item. This is a real cost to external shareholders and it will be understated in the cash flow from operations numbers because the true cost is unknown until vesting occurs.
Finally, the valuation is eye-watering. 10x sales, 12x book value (and that's after a 57% collapse of the share price in the past 12 months).
The interesting part is the shareholder base. Andreessen Horowitz caught my eye in particular. These guys usually back winners, but we don't know the price at which they invested. They may have been invested since pre-IPO. Just because they invested in the past, doesn't mean that they would invest more today.
This is one to monitor.
It provides solutions to connect physical operations data to its connected operations platform, so may be well placed to ride the AI wave. It's not that I don't like the business, it's just that the numbers don't work for me at the moment.
Many of these issues are the same in respect of Tempus AI. Additionally, I am wary when a company includes 'AI' in its name. It kind of reminds me of the time when every company wanted a DOT COM name at the turn of the milenium, simply to ride the wave of investor euphoria for a new technology. For most of them it didn't work out very well. They over-sold themselves and under-delivered.
In conclusion, both may turn out to be winners over time, they just don't fit my investment style at the moment.
NP. I already had TEM and IOT on my watchlist, but I asked Gemini for a list of companies that fit "moat with purpose-built b2b software enhanced by AI"" and got:
AI Moat: Tempus has built one of the world's largest multimodal libraries of clinical and molecular data. Its "Intelligent Diagnostics" platform uses generative AI to analyze this proprietary data, offering precision medicine insights that generalist models cannot replicate.
Status: A top-performing vertical AI stock, significantly outpacing traditional SaaS growth rates due to its unique data advantage in oncology and cardiology.
AI Moat: Samsara processes vast amounts of video and sensor data from vehicle fleets. Its AI moat lies in "AI Insights" and safety coaching features, which detected safety events and reduced crash rates by 73% for customers in 2025. The system creates a feedback loop where more driving data leads to smarter safety algorithms.
Very interesting read, couldn’t agree more with the description of VMS’ moat and structural importance in the age of AI models, ie “garbage in, garbage out”.
Aptitude Software Group plc comes to mind - mission-critical software enabling AI, trading at 10x FCF with activist ownership from L6 Holdings and Pinetree Capital (the Leonard family)!
A wonderful read. I immediately looked up "top companies who created a moat with purpose-built b2b software enhanced by AI" and came up with a list that included two of my existing watchlist stocks, TEM and IOT.
Tempus AI and Samsara?
These are new names for me.
Are you able to share more about why these are on your watchlist? I always wanted this to be a community for sharing valuable ideas.
Thank you in advance
Hey, would you tell me what you thought of them?
I took a cursory look at both. I didn't dig any deeper because they don't currently meet my investment criteria. That's not to say that they aren't good for others, but they just don't fit my portfolio,
Samsara is still pre-profit, although moving closer to profitability. I tend not to invest in companies that have not yet evidenced sustainable profitability. In a few years from now they may look more interesting to me. I may have missed some of the early upside, but I focus on risk adjusted returns and so would rather pay a higher price for a lower risk profile.
Stock based compensation is something else that needs to be carefully monitored. The sums are not insignificant and external shareholders are being diluted. Be careful about any free cash flow numbers that are calculated with stock based compensation as a deductable non-cash item. This is a real cost to external shareholders and it will be understated in the cash flow from operations numbers because the true cost is unknown until vesting occurs.
Finally, the valuation is eye-watering. 10x sales, 12x book value (and that's after a 57% collapse of the share price in the past 12 months).
The interesting part is the shareholder base. Andreessen Horowitz caught my eye in particular. These guys usually back winners, but we don't know the price at which they invested. They may have been invested since pre-IPO. Just because they invested in the past, doesn't mean that they would invest more today.
This is one to monitor.
It provides solutions to connect physical operations data to its connected operations platform, so may be well placed to ride the AI wave. It's not that I don't like the business, it's just that the numbers don't work for me at the moment.
Many of these issues are the same in respect of Tempus AI. Additionally, I am wary when a company includes 'AI' in its name. It kind of reminds me of the time when every company wanted a DOT COM name at the turn of the milenium, simply to ride the wave of investor euphoria for a new technology. For most of them it didn't work out very well. They over-sold themselves and under-delivered.
In conclusion, both may turn out to be winners over time, they just don't fit my investment style at the moment.
Thank you. Those are all excellent points. I am watching these for the long term and haven't bought for many of the same reasons.
Also, Samsara has $686.2 million net cash, I.e., 3.1% of its market cap.
Samsara (IOT) Q3 CY2025 Highlights:
Revenue: $416 million vs analyst estimates of $399.4 million (29.2% year-on-year growth, 4.1% beat)
Adjusted EPS: $0.15 vs analyst estimates of $0.12 (26.4% beat)
Adjusted Operating Income: $79.79 million vs analyst estimates of $59.41 million (19.2% margin, 34.3% beat)
Revenue Guidance for Q4 CY2025 is $422 million at the midpoint, roughly in line with what analysts were expecting
Management raised its full-year Adjusted EPS guidance to $0.51 at the midpoint, a 9.8% increase
Operating Margin: -0.4%, up from -14.7% in the same quarter last year
Free Cash Flow Margin: 13.4%, up from 11.3% in the previous quarter
Customers: 2,990 customers paying more than $100,000 annually
Annual Recurring Revenue: $1.75 billion vs analyst estimates of $1.73 billion (29.4% year-on-year growth, 1.1% beat)
Billings: $416 million at quarter end, up 22.7% year on year
Market Capitalization: $22.38 billion
NP. I already had TEM and IOT on my watchlist, but I asked Gemini for a list of companies that fit "moat with purpose-built b2b software enhanced by AI"" and got:
1. Tempus AI (NASDAQ: TEM)
Vertical: Healthcare & Precision Medicine
Growth: ~83% revenue growth in 2025 (reached ~$1.27 billion); Diagnostics segment grew 111% YoY.
AI Moat: Tempus has built one of the world's largest multimodal libraries of clinical and molecular data. Its "Intelligent Diagnostics" platform uses generative AI to analyze this proprietary data, offering precision medicine insights that generalist models cannot replicate.
Status: A top-performing vertical AI stock, significantly outpacing traditional SaaS growth rates due to its unique data advantage in oncology and cardiology.
2. Samsara (NYSE: IOT)
Vertical: Physical Operations (Logistics, Construction, Utilities)
Growth: ~29-32% revenue growth (reported Q3/Q4 2025).
AI Moat: Samsara processes vast amounts of video and sensor data from vehicle fleets. Its AI moat lies in "AI Insights" and safety coaching features, which detected safety events and reduced crash rates by 73% for customers in 2025. The system creates a feedback loop where more driving data leads to smarter safety algorithms.
Great to learn that Reece has the patient of a monk!