Samsara Stock Drops Despite Earnings Beat, Guidance Boost

Samsara (IOT) shares dropped more than 6% in extended trading on Thursday even as the fleet-management software provider reported quarterly results that topped analysts’ expectations and lifted its full-year earnings and sales outlooks amid broader adoption of its platform.

For the three month period ending May 4, the company, which provides physical asset-tracking systems for customers in industries such as transportation, construction, energy, and the public sector, reported adjusted earnings of 3 cents per share, above the consensus view of 1 cent a share. Revenue in the period tallied $280.7 million, up 37% from a year earlier and ahead of the $272 million expected by analysts.

In the current quarter, Samsara guided net sales between $288 million and $290 million, representing a 31% to 32% jump from last year’s equivalent period. The San Francisco-based company expects adjusted profit between break-even and 1 cent a share. The top-line outlook exceeded analysts’ modeling at $287 million, while the bottom-line midpoint forecast slightly missed the consensus of a penny a share.

Guidance Accounts for Potential Impact of Macroeconomic Weakness

Looking ahead to the full year, the company raised its sales guidance to between $1.205 billion and $1.213 billion from its prior forcast of $1.186 billion to $1.196 billion. It also lifted its profit outlook for the period, saying it now expects adjusted earnings of 13 to 15 cents per share, up from its earlier projection of 11 to 13 cents a share.

CEO Sanjit Biswas told Barron’s that he anticipates the company to produce ongoing strong growth at scale as customers in other industries adopt its platform. The company noted in the shareholder letter accompanying the results that Samsara’s full-year outlook accounts for “the potential impact of worsening macroeconomic factors” on its business.

Watch This Support Level Amid Earnings Weakness

Samsara shares have trended mostly higher since the 50-day moving average (MA) crossed above the 200-day MA to form a bullish golden cross signal. More recently, the stock climbed to a new record high last month, but has retraced to trade below the 50-day MA leading into the company’s quarterly results.

Amid Friday’s expected earnings-related weakness, investors should keep a close eye on the $31 level, an area on the chart where the price encounters a confluence of support from a horizontal line and the upward sloping 200-day MA. A failure to hold this key technical level could see the stock test longer-term support around the $22.25 region.

Samsara shares fell 6.7% to $32.52 in after-hours trading Thursday.

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As of the date this article was written, the author does not own any of the above securities.