Samsara Inc. (IOT): A Bull Case Theory

We came across a bullish thesis on Samsara Inc. (IOT) on Substack by Compounding Your Wealth. In this article, we will summarize the bulls’ thesis on IOT. Samsara Inc. (IOT)'s share was trading at $38.33 as of March 31^st. IOT’s forward P/E was 114.94 according to Yahoo Finance.

Samsara concluded FY 2025 with a remarkable $1.46 billion in annual recurring revenue (ARR), marking a 32% year-over-year (YoY) increase, or 33% on an adjusted basis. The company’s Q4 performance saw revenues reach $346 million, a 25% YoY increase, with net new ARR totaling $109 million. Profitability reached record highs, with Q4 gross margins at 78%, operating margins at 16%, and free cash flow margins at 14%. For the entire fiscal year, Samsara posted $1.25 billion in revenue, reflecting a 33% YoY growth, with net new ARR rising by 16% to $356 million.

Looking ahead to FY 2026, Samsara expects a revenue range of $1.523 billion to $1.533 billion, translating to a 22–23% YoY growth. Q1 2026 is projected to bring in $350 million to $352 million, an increase of 25% YoY. The company targets a non-GAAP operating margin of 11%, with earnings per share (EPS) projected between $0.32 and $0.34. These projections underscore Samsara’s confidence in its ability to sustain growth, driven by strong customer demand and operational improvements.

A significant part of Samsara’s growth strategy lies in the integration of artificial intelligence (AI), which has become a cornerstone of its offerings. The company processes an impressive 14 trillion data points annually, and AI is now being applied across several areas, including predictive maintenance, real-time route adjustments, and automated driver safety. AI-driven solutions have already demonstrated substantial impact, such as improving asset tracking and reducing vehicle downtime for a leading field services provider. Furthermore, the use of AI to enhance employee training has delivered significant results, exemplified by a 98% on-time completion rate for connected training.

Samsara’s asset tracking solutions have also proven to be a key growth driver. The company’s innovative asset tags, which replace traditional RFID and QR codes, offer improved asset visibility, security, and utilization. A DIY moving and storage company, for example, implemented over 10,000 asset tags across its fleet, saving $1 million in safety, idling, and maintenance costs. This technology has shown strong adoption, contributing 15% of net new annual contract value (ACV) in Q4, the highest in 10 quarters, with further expansion expected in sectors like construction, logistics, and industrials.

Samsara’s safety and telematics products continue to gain traction, although adoption remains underpenetrated. Currently, 90% of North American commercial vehicles lack AI-powered safety technology. Yet, the company has achieved impressive results for its clients. For instance, Bimbo Bakeries saw a 70% reduction in collision risk, 64% fewer instances of harsh driving, and a 49% decrease in policy violations after adopting Samsara’s platform. As fleet management continues to be a priority for businesses, Samsara’s products are well-positioned to address both operational efficiency and safety needs.

The company also continues to experience robust growth in large customer segments. As of FY 2025, Samsara had 2,506 customers generating $100K+ in ARR, a 36% YoY increase, with 203 new customers added in Q4 alone. The company’s $1M+ ARR customer base grew by 44%, demonstrating strong demand from larger enterprises. Notable new wins include partnerships with top global telecom providers, U.S. LTL carriers, and Bimbo Bakeries, further solidifying Samsara’s position as a leading provider of telematics and fleet management solutions.

International expansion remains a critical growth avenue for Samsara. In Q4, international markets contributed 17% of net new ACV, with particularly strong performance in the UK and Mexico. As physical operations continue to digitalize worldwide, Samsara’s solutions are increasingly being adopted in Europe and Latin America, further broadening the company’s market footprint.

Despite facing challenges such as macroeconomic uncertainty, geopolitical risks, and long sales cycles for large enterprise customers, Samsara’s growth trajectory remains robust. The company is confident in its ability to continue expanding by leveraging AI to drive efficiencies and optimize operations for its customers. The integration of AI, combined with Samsara’s expanding product suite, positions the company well to capitalize on the ongoing digital transformation of physical operations. The company is poised to sustain durable growth, with a clear path to multi-billion-dollar revenue potential, underpinned by its innovative platform and increasing international presence.

In the coming months, Samsara plans to further refine its strategy, with an Investor Day scheduled for June 2025, where it will outline its AI monetization plans and new product developments. These strategic initiatives, combined with a strong operational foundation and increasing customer adoption, make Samsara a compelling investment in the rapidly growing field of connected operations and AI-driven solutions.

Samsara Inc. (IOT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held IOT at the end of the fourth quarter which was 30 in the previous quarter. While we acknowledge the risk and potential of IOT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than IOT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.