Silicon Valley wouldn’t be the technology hub it is today without serial entrepreneurs like Sanjit Biswas and John Bickett. After hitting it big with Meraki, they cofounded Samsara ,IoT), and now its stock is on the move.
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Biswas and Bickett sold Wi-Fi and cloud networking startup Meraki to Cisco Systems ,CSCO) for $1.2 billion in 2012. Three years later, they started Samsara. It now has a valuation exceeding $10 billion amid a run-up in shares, which go by the IOT stock ticker.
Samsara began by selling fleet management software in the transportation industry. Leveraging Global Positioning System, or GPS, technology along with telematics — sensor data gathered from trucks — Samsara helped customers monitor routes and vehicle performance so they could save money on preventive maintenance and fuel usage.
From there, Samsara expanded into video-based safety products in 2018. Furthermore, these enabled fleet customers to lower vehicle insurance costs.
In-cab, dual-facing cameras provide real-time video streaming. Also, artificial intelligence software at cloud data centers detects high-risk behavior, such as distracted driving and lane departure.
IOT Stock: AI Camera Company
Samsara gets about 80% of its annual recurring revenue, or ARR, from subscription services through vehicle telematics and video-based safety. Outside of transportation, it’s focused on sectors such as energy and manufacturing, food and beverage, and state and local governments.
“We are more of an AI camera company today than we are a GPS location company,” Chief Financial Officer Dominic Phillips said at a recent tech conference.
More recently, Samsara has targeted another market — monitoring industrial equipment and government operations with its “Internet of Things” platform. Samsara IoT data sensors and video cameras monitor activity at construction sites or factory floors.
“What’s interesting is that we’re starting to see new logos and use cases that are being landed outside of the vehicle,” Phillips said at the Morgan Stanley tech conference.
“One of the largest new logos that we had in Q4 was a customer that landed with connected equipment as their first use case,” he went on to say. “They produce a lot of steel and they recycle scrap and secondary metals. They selected us to track these big containers of recycled scrap metal. It was our third-largest connected equipment deal ever.”
Morgan Stanley Biggest Shareholder
Samsara stock has gained 28% from a year ago. IOT stock holds a Relative Strength Rating of 97 amid the bear market in technology stocks.
Morgan Stanley Investment Management was Samsara’s largest shareholder as of March 2. Also, it owned nearly 11% of IOT stock.
Meanwhile, BMO Capital Markets in February initiated coverage of IOT stock with a market-perform rating.
“Samsara has been among the fastest growing SaaS (software-as-a-service) companies since the launch of its first products in 2016,” BMO Capital analyst Daniel Jester said in a recent note to clients. “Ultimately, the company sees itself as a system of record for physical assets, similar to work day ,WDAY) for HCM (human capital management) or Salesforce ,CRM) for CRM (customer relationship management).
In the fiscal year ended Jan. 28, Samsara revenue jumped 52% to $652.5 million. The company reported a full-year loss of 13 cents, narrowing its loss from 42 cents a year earlier.
ARR climbed 42% to $795 million. Also, Samsara made progress in profitability.
“We went from burning $50 million in Q1 (fiscal 2023) to burning $6 million in Q4,” Phillips said at the Morgan Stanley conference.
Samsara Stock: Landing Big Customers
Evercore ISI initiated coverage of IOT stock in 2022 with an “in-line” rating.”
“The combination of Samsara’s unique SaaS-based platform and secular trends such as the ability to affordably capture, process, and analyze IoT data is fueling strong customer demand, especially among larger companies,” Evercore analyst Kirk Materne said in a note.
Samsara says it has more than 1,200 customers topping the $100,000 level in annual recurring revenue. Also, it has more than 50 customers paying in excess of $1 million in ARR.
In vehicle telematics, the Samsara competes with Verizon Communications’ ,VZVerizon Connect division, Trimble ,TRMB), Solera Fleet Solutions (Omnitracs), Motive, and orbcomm ,ORBC, In IoT markets, Samsara competes with Johnson Controls ,jci, Motorola Solutions’ ,MSIavigilon division, Honeywell ,hon) and Verkada.
San Francisco-based Samsara reported a loss of 2 cents per share on an adjusted basis vs. a 5-cent loss a year earlier. Meanwhile, revenue surged 48% to $186.6 million, the company said.
Analysts expected Samsara to record a 5-cent loss on sales of $171.2 million.
Samsara management has told analysts it expects to be break-even in adjusted free cash flow in the fourth quarter of fiscal 2024. That would mark a big milestone, analysts say.
IOT Stock Investor Day In June
Samsara reported January-quarter profit and revenue that topped expectations. Still, Goldman Sachs analyst Kash Rangan has concerns that the US economy could weaken.
“While we give credence to the quarter, we reference exposure to traditionally low margin end markets (transportation, construction) and continued reliance on hardware to collect necessary data (contributing to profitability headwinds).”
TD Cowen analyst Derrick Wood expects Samsara to weather any economic downturn.
“IOT’s value proposition continues to take hold amid economic uncertainty as the platform helps customers drive hard dollar ROI savings (via fuel savings, lower maintenance costs, higher asset utilization, and lower insurance premiums),” he said in a note.
Furthermore, Samsara hosts an investor day on June 22.
“We look forward to the Investor Day where we expect to hear more on the product roadmap, financial model and business strategy going forward,” RBC Capital analyst Matthew Hedberg said in a note.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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