On Friday, Evercore ISI adjusted its price target on Samsara Inc (NYSE: NYSE:IOT) shares from $41.00 to $40.00 while maintaining an In Line rating. The firm acknowledged Samsara's consistent performance, noting a "clean beat/raise" in the face of high expectations.
Although the revenue beat this quarter was slightly lower than in previous quarters, the company's long-term fundamentals are seen as solid, with net new Annual Recurring Revenue (ARR) growing by 21% in the first fiscal quarter, a rate well above its peers.
The research firm remains positive about Samsara's ability to further develop its software offerings, such as connected forms and MEM, which are expected to enhance Gross Margin (GM) and broaden the Total Addressable Market (TAM) through per-user rather than per-device metering.
With a valuation of 13 times enterprise value to CY25 sales, Samsara's shares are deemed to be fairly priced, and the premium is considered justified due to the scarcity of companies with over $1 billion in scale and a growth rate of 30%.
Evercore ISI highlighted several key points from the past quarter, including the addition of 116 new customers with over $100,000 in ARR, a 43% increase year-over-year and a 6% rise from the previous quarter.
Customers with more than $100,000 in ARR now represent 53% of the total ARR, up from 49% last year, with average ARR per customer in this group increasing to $316,000 from $305,000 year-over-year.
The firm also emphasized the scaling of multi-product adoption, with 94% of customers with over $100,000 in ARR and 83% of core customers subscribing to multiple Samsara products.
In terms of product segments, Video-Based Safety and Vehicle Telematics both achieved over $450 million in ARR with growth over 30%, and Equipment Monitoring & Other reached $125 million+ in ARR at 30% growth. Additionally, half of core customers and two-thirds of large customers are utilizing Equipment Monitoring and Other services.
The upcoming analyst day in late June is expected to shed more light on the company's software and Generation AI roadmap. The price target adjustment to $40 is based on a 15 times multiple of enterprise value to CY25 sales, reflecting the broader valuation contraction in the market.
In other recent news, Samsara Inc. has reported significant growth in its customer base and annual recurring revenue (ARR), according to its Q4 earnings call.
The company's ARR reached $1.1 billion, marking a 39% year-over-year growth, while its Q4 revenue stood at $276 million, a 48% increase from the previous year. This contributed to a full-year revenue of $937 million, up by 44% year-over-year.
Piper Sandler maintained a neutral stance on Samsara, based on their proprietary "Transportation Traffic Tracking," forecasting near and long-term revenue trends. Their analysis suggests a potential $20 million increase to Samsara's fiscal year 2025 guidance, indicating a growth rate exceeding 30% year-over-year.
TD (TSX:TD) Cowen reiterated a Buy rating on Samsara, anticipating another quarter of strong performance. The firm noted Samsara's focus on expanding its customer base in non-transportation verticals and developing its software-only product offerings.
Similarly, Loop Capital initiated coverage on Samsara with a Buy rating, highlighting the company's unique approach in the market and its broad applicability of technology.
Finally, BMO (TSX:BMO) Capital Markets updated its outlook on Samsara, raising the share price target to $40 from the previous $35, following a stronger-than-expected quarter marked by accelerated growth in new Annual Contract Value.
Despite the positive results, the firm maintains a Market Perform rating on Samsara's shares, reflecting a cautious approach as it assesses the company's guidance for the year ahead.
InvestingPro Insights
Recent metrics and analyst outlooks from InvestingPro provide a deeper dive into Samsara Inc's (NYSE: IOT) financial health and market performance. With a market capitalization of $19.2 billion, the company's substantial growth is mirrored by a notable 43.65% revenue increase over the last twelve months as of Q4 2024. Despite not being profitable during this period, with an operating income margin of -26.66%, analysts have shown confidence in Samsara's potential for profitability, as evidenced by 9 analysts revising their earnings upwards for the upcoming period. This optimism may be linked to the company's robust gross profit margin of 73.65% and the anticipation of expanding software offerings.
Investors should be aware of the high valuation multiples with Samsara trading at a Price / Book multiple of 20.98 and a forward P/E ratio of -79.61, which suggests expectations of future growth are priced in. The company's stock price has experienced volatility, but it's worth noting that the price is currently at 82.45% of its 52-week high with a recent 1-week total return of 2.74%. Samsara does not pay a dividend, which is typical for growth-focused tech companies reinvesting earnings into expansion efforts. For those interested in further insights, there are additional InvestingPro Tips available that can be accessed with the use of coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
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