Tech initial public offerings (IPOs) have accounted for 25% of all IPOs worldwide in 2021, and Samsara joins the pack as we close out the year. With growth companies currently out of favor, it’s uncertain if this internet of things (IoT) player can impress investors or if it will suffer a similar faith, with downward pressure on valuations right now.
What does Samsara do?
Samsara is an internet of things (IoT) company connecting complex physical tasks of industrials and the construction industry to the cloud. The solutions include monitoring day-to-day operations, managing fleets, resources, safety, maintenance, and visibility. Its AI-powered connected operations cloud is using data to increase efficiencies, sustainability, and regulatory compliance for its customers.
When does Samsara begin trading?
Samsara is set to begin trading on the New York Stock Exchange on December 15, 2021, trading under the ticker IoT. The company’s offering is 35 million shares priced at $23 per share in a bid to raise over $800 million at a proposed valuation of $11.5 billion.
Is Samsara a good investment?
The financials from Samsara’s S-1 filing look solid.
The company has 72% gross margins, and more than 13,000 customers overall. It has increased the number of customers spending annual recurring revenue (ARR) of more than $100,000 year-over-year (YoY) by 83% in Q3 2021, and 89% of enterprise-grade customers spend on multiple products, which suggests a solid ecosystem for cross-selling.
The company saw a huge jump in revenue for Q3 2021 — more than 70% year-over-year (YoY)— coming in at $303 million, compared to the $174 million it had achieved for the same period in the year prior. What’s more is the operational efficiencies in the same period, as expenses, comparatively, grew less than 10%, from $294 million in Q3 2020 to $319 million in Q3 2021.
Samsara’s total addressable market is estimated to be more than $55 billion, so it believes there’s plenty of room for further growth. It might look like Samsara’s YoY numbers are deceiving — considering a temporary bounceback from pandemic lows for the industrial sector — but it’s evident from the company’s timeline and track record that it has continuously innovated while proving its revenue model with sustained quarter-over-quarter growth in recent years.
It’s likely to be a beneficiary of the $1 trillion U.S. infrastructure plan too, but for now, it’s probably a good idea to see how the company performs after a few more quarters before investing.
Financial Writer at MyWallSt
David's favorite stock is Google. He's a daily user of its YouTube platform, where you can learn or find something brand new at the touch of a button. He believes the company will continue to grow for many years to come.