5. Samsara Inc. (NYSE:IOT)
Share Price as of January 5: $45.91
Average Upside Potential as of January 5: 20.89%
Number of Hedge Fund Holders: 30
Samsara Inc. (NYSE:IOT) provides Connected Operations Cloud solutions that use AI and IoT to empower businesses in transportation, construction, and logistics for enhanced efficiency and safety. By connecting physical assets to the cloud, it collects and analyzes real-time data and enables data-driven decisions and predictive insights to optimize operations.
The company’s AI-driven platform delivers significant ROI (return on investment) for customers, with an average estimated savings of $2 million per customer per year, translating to over 8x ROI. This includes reduced insurance costs, improved fuel efficiency, and enhanced worker safety. The company’s ARR surged 35% year-over-year to reach $1.35 billion, driven by increased new customers, with 170+ companies joining the company with an ARR exceeding $100,000.
Furthermore, Samsara Inc. (NYSE:IOT) has introduced Samsara Intelligence, a new suite of AI offerings. This includes tools such as Samsara Assistant, which provides real-time insights and guidance, and Intelligent Experiences, which seamlessly integrates AI recommendations directly within the platform. This AI is built upon a massive dataset exceeding 10 trillion data points annually. This allows the company to develop sophisticated AI models that address varying challenges faced by businesses.
It uses AI to analyze massive datasets from connected devices, enabling customers to optimize operations, making it a compelling investment opportunity. For this reason, Baron Fifth Avenue Growth Fund stated the following regarding Samsara Inc. (NYSE:IOT) in its Q3 2024 investor letter:
“Lastly, we initiated a position in Samsara Inc. (NYSE:IOT), which provides a cloud software platform for commercial vehicle telematics, video-based driver safety, driver workflow automation, and industrial equipment monitoring. Its software collects and analyzes data from sensors and cameras installed in its customers’ commercial trucks, construction equipment, warehouses, and other assets, helping companies visualize and improve the state of their operations. More than 17,500 customers in the transportation, field services, construction, utilities, and other industries have adopted Samsara, and last year the company became one of the fastest software companies ever to reach $1 billion in annual recurring revenue (ARR).
Samsara has been winning share from competitors in the $51 billion connected fleet software market due to its superior cloud native architecture, ability to address multiple use cases in a single platform, and its rapid product release cycle. Importantly, as Samsara continues to expand its connected asset base, it is building an unmatched data asset that it is using to drive better outcomes for its customers relative to competitors. Capturing more than 10 trillion data points from over 70 billion miles driven, Samsara uses AI to help companies optimize their vehicle routes, prevent accidents, improve asset utilization, reduce fuel expenses, and lower insurance premiums. In 2023, across its customer base, the company prevented 200,000 accidents and reduced carbon emissions by 2.3 billion pounds. Seeing a fast and tangible return on investment, customers have renewed and expanded their Samsara subscriptions at a healthy rate.
We see a long runway for growth as Samsara expands in existing accounts and wins new logos. Samsara is less than 50% penetrated in its existing customers’ vehicle fleets and has a significant opportunity to cross-sell newer non-vehicle products into its base. As it has scaled, Samsara has delivered healthy operating leverage, and we think free cash flow can expand to more than 20% longer term.”
