As investors continue to hunt for artificial intelligence plays, maybe they should also take a look at
Samsara,
a play on the internet of things (remember that trend?).
The internet of things really is a significant development—but not quite on the scale of AI. A few years ago, the company
C3.ai
changed its name from C3.iot, and it turned out to be a good call. But the IoT landscape is a lot less crowded, and that is just fine with Samsara.
Samsara (ticker: IOT) provides software and systems to help companies track physical assets—electric utilities, state and local governments, construction companies, waste management firms, and others with large fleets of vehicles and other equipment. As CEO Sanjit Biswas noted in an interview with Barron’s, those companies have “some resilience built in”—they aren’t going to be as affected by budgetary constraints as some other vertical markets.
Biswas says customers are turning to Samsara to get more efficient, to reduce accidents and insurance rates. “We’re providing real value to our customers,” generating a return on the investment in Samsara software in a year or sometimes as little as six months, he says.
For the fiscal first quarter ended April 29, Samsara posted revenue of $204.3 million, ahead of both the company’s guidance range of $190 million to $192 million, and the Wall Street consensus at $192 million.
Annual recurring revenue was up 41% to $856.2 million. The company posted an adjusted loss of two cents a share, while the Street had projected a per-share loss of five cents. Under generally accepted accounting principles, the company lost 13 cents a share.
Samsara shares have climbed about 53% so far this year. In late trading Thursday, the stock jumped 8% to $20.50.
Samsara’s guidance also came in strong.
For the July quarter, the company sees revenue between $206 million and $208 million, up 34% to 35%, and above the Street consensus forecast at $201 million. It forecasts an adjusted loss of 2 to 3 cents a share for the period, comparable to the Street estimate of a loss of 3 cents.
For the January 2024 fiscal year, the company boosted its revenue forecast to a range of $866 million to $874 million, up 33% to 34%. That’s above Samsara’s previous forecast of $838 million to $848 million, and well ahead of the Street consensus at $846 million. The company now sees adjusted profits ranging from break-even to a loss of 2 cents a share; the Street had been expecting a loss of 7 cents.
Biswas says the company has barely dented the market—he says the customers Samsara serves account for 40% of the world’s GDP. The company is in the single digits in terms of its share of the potential market, he adds.
One obvious question for Samsara is when the company becomes profitable. Biswas says the company is focused on adjusted free cash flow—which was a loss of $2.2 million in the April quarter. The company expects to reach sustainable positive free cash flow by the fiscal fourth quarter, he added.
As for artificial intelligence software, Samsara has been using AI in products for a few years now, in particular for tracking the safety of physical operation of trucks and other vehicles, the CEO notes: They use vehicle sensors to take in data on speeding, tailgating, and other information on behaviors that could lead to accidents. They aren’t generating a lot of text, like Bard or Bing; they are using data to train detection models and save customers money.
Write to Eric J. Savitz at [email protected]
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