Samsara Inc. (IOT)- Valuation vs. Reality

Investors should pay attention to these earnings quality trends in Q2

Samsara (IOT) trades at over 90 times forward non-GAAP earnings—a valuation that implies very strong future performance. Despite being in business for more than a decade, the company has yet to report meaningful profits and has only come close by relying heavily on non-GAAP adjustments. While Samsara isn’t unique in the tech sector in this regard, its valuation rests firmly on the belief that revenue growth will eventually deliver operating leverage, profits, and cash flow.

However, these types of valuations are particularly vulnerable to any signal that growth might slow. Investors should be alert for signs of deceleration or signs that recent performance has been propped up by unusual or one-time factors. In recent quarters, we’ve identified several data points that warrant closer scrutiny.

Let's get behind IOT's numbers…

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