Samsara is rising after upgrade as recurring revenue gains momentum

By Liz Moyer

Investing.com -- Samsara Inc (NYSE:IOT) shares were jumping after Goldman Sachs upgraded them to Buy from Neutral.

Shares of the connected device maker rose 21% on Friday to a new 52-week high and are up 63% so far this year. Goldman raised its price target to $27 from $16, implying a 31% upside from current levels.

Samsara makes systems that help people track trucking fleets, construction equipment and more. Revenue rose 48% in the January quarter, while full-year revenue rose 52%. Both beat expectations. 

Recurring revenue is helping to boost results. As of the end of the fourth quarter, annual recurring revenue was $795.1 million, up 42% from a year earlier, and the 1,237 customers with ARR over $100,000 is up 53% in a year.

Goldman analysts cited persistent customer demand despite the macro environment and trends in free cash flow for the upgrade. “We don’t believe the increased focus on profitability should hinder top-line performance, and believe IOT can deliver durable 20%+ top-line growth complemented by attractive FCF generation,” the analysts wrote.

The company has forecast fiscal first quarter 2024 revenue of $190M to $192M, which would be up 33% to 35% from the same time last year. For the full year 2024, it is forecasting revenue growth of 28% to 30%. 

“While growing at scale, we remain committed to operating efficiently on our path to profitability,” CEO Sanjit Biswas said with the release of earnings on Thursday. “We see a vast opportunity for our customers as they modernize their physical operations, which will have a profound impact on our global economy.”