Why Is Samsara (IOT) Stock Down After a Strong Quarter?

TLDR

• Samsara posted Q1 fiscal 2027 EPS of $0.17, beating the $0.13 consensus, with revenue of $478.8 million vs. the expected $455.2 million.
• Annual recurring revenue hit $2 billion, up 30% year over year, with ARR from million-dollar customers surging 62%.
• Full-year fiscal 2027 revenue guidance was raised to $2.005–$2.013 billion, above the prior outlook and Street estimates.
• The stock fell roughly 3% in premarket trading to $34.18, after closing the prior session at $35.21.
• RBC Capital raised its price target to $42 from $41, maintaining an Outperform rating, but the modest lift did little to stop the selling.

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Samsara (IOT) reported a clean earnings beat Thursday, but investors decided to take money off the table anyway. The stock slipped to $34.18 in premarket trading Friday, down about 3% from its $35.21 close.

Samsara Inc., IOT

The company posted adjusted EPS of $0.17 for Q1 fiscal 2027, clearing the $0.13 analyst estimate by a wide margin. Revenue came in at $478.8 million, up 31% year over year and well above the consensus of $455.2 million.

Annual recurring revenue crossed $2 billion for the first time, rising 30% from a year ago. Net new ARR grew 30% to $100.7 million, while ARR from customers spending over $1 million annually jumped 62% — extending a four-quarter acceleration streak.

Adjusted operating margin expanded to 19% from 14% a year earlier. The company said improved efficiency across sales, R&D, and general and administrative costs drove the gains.

CEO Sanjit Biswas highlighted GAAP EPS profitability for the third consecutive quarter. He pointed to growing labor constraints at customers as a key driver of demand for Samsara’s AI-powered automation tools.

AI Data Center Buildout Is Lifting Demand

Samsara also called out the rapid buildout of AI data centers as a tailwind. The company said that infrastructure investment — covering power generation, cooling, and grid upgrades — is flowing into the physical industries it serves and creating durable demand.

The company ended the quarter with 3,363 customers generating more than $100,000 in ARR and 190 at the $1 million-plus level. It signed 11 new deals over $1 million in net new annual contract value, its second-best quarter on record.

Emerging products contributed more than 20% of net new annual contract value for the second consecutive quarter.

Guidance Nudged Up, But Not Enough for the Bulls

For full-year fiscal 2027, Samsara raised adjusted EPS guidance to $0.70–$0.72 from $0.65–$0.69, ahead of the $0.68 consensus. Revenue guidance was lifted to $2.005–$2.013 billion, above its prior forecast of $1.965–$1.975 billion and the Street’s $1.971 billion estimate.

Q2 guidance called for revenue of $482–$484 million against a Wall Street target of $480 million — a slim beat that left little room for excitement.

That narrow margin of upside appears to be the crux of the selloff. IOT had already surged roughly 20% after last quarter’s results in March, lifting the bar for a sustained post-earnings rally.

RBC Capital raised its price target to $42 from $41 and kept its Outperform rating, a constructive but cautious move.

The stock is trading well off its 52-week high of $47.47, but above its 52-week low of $23.38.

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