SamsaraIOT

We expect revenue to grow from $1.6B in FY2026 to $3.8B in FY2031 (~19% CAGR), with EPS growing from $0.51 to $1.68 (~27% CAGR). Growth is driven by the continued digitization of physical operations as more industrial fleets adopt the integrated cloud platform for safety and efficiency. Profitability improves as the initial costs of building the software platform are spread across a much larger base of recurring subscription customers. EPS grows faster than revenue Operating margin expected to reach ~28% by FY2031.

AI-driven safety features become the industry standard for insurance. If Samsara's AI dash cams can prove they significantly reduce accidents, insurance companies may mandate their use.

Expansion into non-transportation physical operations like manufacturing. Moving beyond trucks into factory floor and equipment monitoring opens an addressable market three times larger than telematics.

International markets scale to 25% of total revenue. Successfully replicating the U.S. sales model in Europe and Mexico provides a second decade of high growth.

Large enterprise customers slow down software spending in a recession. While safety is essential, industrial companies may delay new sensor rollouts if their own cargo volumes drop.

Commoditization of basic telematics hardware forces a price war. If competitors start giving away hardware for free, Samsara may have to lower its total contract prices.

A major data breach or privacy failure for physical assets. A security flaw that allows hackers to track or interfere with large fleets would cause massive brand damage.

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We use a Forward P/E approach (price-to-earnings applied to next year's earnings). It fits Samsara because the company has successfully transitioned to GAAP (generally accepted accounting principles) profitability, making earnings a more reliable signal of value than the revenue multiples typically used for loss-making software firms.

Next year's projected EPS of $0.88 multiplied by a 50x multiple gives a per-share fair value of $44. A 50x multiple sits at the mid-point of the high-growth infrastructure software peer range (ServiceNow 52x, Snowflake 42x), justified by Samsara's unique hardware-software attach rate. We use the deterministic engine's FY2028 EPS estimate to capture the first full year of scaled, profitable operations following the FY2026 inflection.

A 5-year DCF cross-check produces a fair value of $32 — within 27% of our Forward P/E answer of $44, confirming the directional result. The DCF (discounted cash flow) is more conservative because it heavily weights the high 10% discount rate required for high-volatility tech names. While the two methods disagree slightly, the $44 P/E target better reflects how the market values software companies at the point of their first major structural earnings inflection.

We're assuming Samsara sustains subscription revenue growth above 25% through FY2028. Growth has stayed resilient at 28% YoY even as the revenue base crossed $1.6B, supported by the critical, non-discretionary nature of fleet management and safety software.

We're assuming operating margins expand to roughly 12% by FY2028. The business reached GAAP profitability in late FY2026, and the 76.7% gross margin provides a powerful runway for earnings leverage as sales and marketing expenses stabilize as a percentage of revenue.

The biggest risk is a slowdown in the physical operations digitization trend, which would stall the company's high-growth subscription engine. This would likely compress the forward multiple from 50x to 35x, knocking roughly $13 off the per-share fair value. Watch for any quarterly deceleration in the core Subscription and Circulation revenue line below 22%.