Investors Bullish on Samsara Stock Ahead of Q2 Results; Shares Up 75% Since May

Samsara Inc Gets Head Start in $55-Billion Market

Software infrastructure company Samsara Inc (NASDAQ:IOT) only went public in December 2021, and things weren’t pretty at first. IOT stock fell by 70% in its first few months on Wall Street.

Admittedly, that had more to do with surging inflation and rising interest rates than anything going on at the company.

Samsara stock has been trending higher since the company reported wonderful first-quarter results in early June. As of this writing, IOT stock is up by 15% over the last month and 75% over the last three months.

Those are healthy gains, and by all accounts, Samsara stock is just getting started.

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Samsara Inc estimates that its total addressable market worldwide was approximately $54.6 billion at the end of 2021 and will grow by a compound annual growth rate (CAGR) of 21% to $96.9 billion by the end of 2024. (Source: “Form S-1,” Securities and Exchange Commission, last accessed August 16, 2022.)

Chart courtesy of StockCharts.com

About IOT Stock

With a stock ticker like “IOT,” you might assume that Samsara Inc has something to do with the Internet of Things (IoT)—and you’d be right. The San Francisco-based company is a pioneer of connected operations in the Cloud, allowing businesses that depend on physical operations to harness the IoT. (Source: “Investor Day,” Samsara Inc, June 15, 2022.)

Samsara Inc’s scalable technology (artificial intelligence, wireless, and IoT) helps businesses harness valuable data to provide an instant overview of their entire organization. The company helps identify and eliminate inefficiencies, streamline operations, and provide insight into customers and business partners.

One of the technologies that Samsara Inc focuses on is telematics. This type of technology uses the Global Positioning System (GPS) and onboard diagnostics to send and receive information. This technology is particularly popular among businesses with remote workers.

Telematics improves safety, efficiency, and accountability. It helps businesses track company assets, enhance quality of service, and provide better customer service. It can also help lower fuel costs, discover optimal routes, enhance on-time delivery, increase security, and significantly reduce premiums.

It’s estimated that the worldwide telematics market alone was $32.9 billion in 2021 and that it will grow to $63.7 billion in 2024. (Source: “Form S-1,” Securities and Exchange Commission, op. cit.)

Samsara Inc serves more than 25,000 customers in North America and Europe in a wide range of industries, including construction, education, energy, field services, food and beverage, government, health care, logistics, manufacturing, trade (wholesale and retail), transportation, and utilities.

Three of the company’s customers are the City of Boston, Iron Mountain Inc (NYSE:IRM), and Sysco Corporation (NYSE:SYY).

Samsara Inc has a history of significant revenue growth. Since it began its operations in 2015, the company’s annual revenue has grown to $428.0 million.

That’s significantly higher than that of its competitors. Over their first six years of operations, Salesforce Inc (NYSE:CRM) only hit $310.0 million in annual revenue, Workday Inc (NASDAQ:WDAY) hit $134.0 million, Datadog Inc (NASDAQ:DDOG) hit $100.0 million, and ServiceNow Inc (NYSE:NOW) hit $43.0 million.

Those companies have all since gone on to generate billions of dollars in annual revenue. Correlation isn’t causation, but the outlook for Samsara is exceptionally bright.

Q1 Revenue Jumps 63%

For the first quarter of fiscal 2023 (ended April 30, 2022), Samsara announced that its revenue increased by 63% year-over-year to $142.6 million. (Source: “Samsara Reports First Quarter Fiscal 2023 Financial Results,” Samsara Inc, June 2, 2022.)

The company’s annual recurring revenue (ARR) in the quarter went up by 59% year-over-year to $607.2 million. Moreover, Samsara had 897 customers that paid it more than $100,000 in ARR in the first quarter of fiscal 2023, up by 73% from the first quarter of fiscal 2022.

Sanjit Biswas, Samsara Inc’s co-founder and CEO, commented, “We delivered another strong quarter of growth, surpassing $600 million of ARR in just our seventh year since founding.”

He added,

We are continuing to see robust demand for our Connected Operations Cloud. Our customers are digitally transforming their businesses to stay competitive in the current economic environment, and our offerings are becoming a must-have for companies looking to streamline their operations, increase fuel efficiency, and reduce their cost stacks.

(Source: Ibid.)

Business Outlook

For the second quarter of fiscal 2023, Samsara Inc expects its total revenue to increase by at least 41% year-over-year to the range of $142.0 to $144.0 million. For fiscal 2023, the company expects its total revenue to climb by between 38% and 40% to the range of $590.0 to $600.0 million.

In Samsara Inc’s S-1 filing with the U.S. Securities and Exchange Commission, management noted that, while retail, advertising, media, and information technology have already undergone a digital transformation, industries with physical operations are still in the early stages of digital adoption. (Source: “Form S-1,” Securities and Exchange Commission, op. cit.)

With advancements in IoT connectivity, cloud computing, video imagery, and artificial intelligence, Samsara Inc believes “industries that depend on physical operations are at the precipice of a massive wave of digital adoption.” (Source: Ibid.)

Samsara will be releasing its second-quarter financial results after the market closes on August 31.

Analyst Take

Samsara stock is an under-the-radar tech stock with a strong presence in a multi-billion-dollar, growing industry.

Samsara Inc continues to increase its revenue, expand its customer base, release customer-centric products, expand its partnerships, and grow its business internationally.