-$0.05
$1.02
bear -$0.05
base $0.68
bull $1.02
margin of safety $0.25
market price* $39.57
Business condition attached to the margin of safety
Owner earnings (operating cash flow less working-capital swings, stock compensation and maintenance capital spending) at or above roughly $70 million a year for at least four more reported quarters, and company disclosure of customer renewal or retention rates that support contract revenue continuing beyond the current three-to-five-year initial terms.
Samsara sells a subscription platform, the Connected Operations Platform, that combines its own connected IoT devices with cloud software applications to help organizations run their physical operations. It prices per asset per application; for example, one vehicle using both the AI Video-Based Safety and Telematics applications counts as two subscriptions. About 98% of revenue is subscriptions. Revenue was $1,618.6 million in the fiscal year ended January 31, 2026, up 29.6% from $1,249.2 million, and about 86% comes from customers in the United States. Gross margin is about 77%. Contracts typically run three to five years and are generally non-cancelable, and contracted revenue not yet recognized was $3,765.9 million at year-end, of which $1,641.2 million is due within 12 months. Customers have no obligation to renew when a term ends, and the filing acknowledges some have chosen not to. The company had over 12,000 customers paying $25,000 or more a year in annual recurring revenue at year-end. How we measure earnings. We start from operating cash flow, remove the swings in receivables, deferred revenue, inventory, capitalized device and commission costs and other operating balances, subtract stock-based compensation as a real cost ($315.0 million in fiscal 2026, 19.5% of revenue), and subtract only the part of capital spending needed to maintain the business. On that basis the company did not earn a surplus for owners in any of the five years we measured: about -$351 million in fiscal 2022, -$259 million in 2023, -$273 million in 2024, -$156 million in 2025 and -$10.5 million in 2026, or about -$0.02 per share. The improvement is real: $145 million in the latest year, driven by revenue growth outpacing costs, with stock compensation growing 13% against revenue growth of 30%. The starting level. Six months into fiscal 2027 (ended August 1, 2026), operating income was +$12.1 million (+$7.2 million and +$4.9 million in the two quarters) versus -$59.9 million a year earlier, and revenue rose 30.2% to $987.3 million. Two consecutive profitable quarters after stock compensation is charged is the evidence we use to lift the starting level from the fiscal 2026 figure to about $72 million a year, or roughly $0.12 per share, built by adding the annualized operating-income improvement and higher depreciation to the fiscal 2026 result and deducting somewhat higher maintenance spending. We did not use reported net income for the half-year: it included $54.4 million of non-operating income, about as much as all of last year, and we could not trace the extra from the filing. The improvement we assume for the coming year, about $82 million, is smaller than the $145 million achieved last year. What we credit and what we leave out. We credit only what is contracted or already achieved: the current earning level, supported by contracts that cover roughly 2.3 years of revenue and initial terms of up to five years. We give no credit for continued 30% revenue growth, further margin gains, new products or new customers. The growth record is strong but spans only about six years of filings, and operating cash flow was negative until fiscal 2025 (-$11.8 million in fiscal 2024, +$131.7 million in fiscal 2025), so it was not funded from the company's own cash for most of that period. Further profit gains from operating leverage are margin expansion, which we do not credit until it is in hand. Cash and investments of $1,236.9 million already produce interest that sits inside these earnings. Base case, $0.68 per share: about $72 million a year for five years, matching the longest initial contract term, then fading evenly to zero over the following five years because nothing in the filings measures renewal rates beyond the contracts.
Bear case, -$0.05: the recent improvement does not hold, earnings stay at the fiscal 2026 level of about -$10 million a year for three years, roughly the span of contracted revenue visible today, and nothing is worth counting after that; the shares are then worth roughly nothing.
Bull case, $1.02: the $72 million level is sustained for ten years as large customers renew (customers above $100,000 of annual recurring revenue rose from 2,484 to 3,194 in fiscal 2026 and account for about 61% of annual recurring revenue), then fades over five more years. What would make this wrong. The stated value is far below what the business could be worth if 30% growth persists and profit margins keep widening, because our approach gives no credit for either until it is demonstrated. If Samsara keeps compounding revenue and turns each new dollar into owner earnings at the rate seen in three of the last four years (roughly 38 to 41 cents per dollar of added revenue), the value would be well above our bull case. Conversely, stock compensation of about $315 million a year is large relative to the earnings level, so a modest rise would erase the surplus.