Your Portfolio in Brief
Founded in 2015, Samsara specializes in IoT and AI solutions for fleet management, industrial equipment, and operations. Based in San Francisco, the company offers connected sensors and cloud-based software that enable businesses to optimize their assets and productivity. Today, it serves over 2,300 customers, each generating more than $100,000 in annual recurring revenue (ARR), a 38% increase from the previous year.
Key Highlights in 2024
• Revenue Growth: Samsara reported a 36% increase in revenue, reaching $322 million in the fiscal third quarter.
• Annual Recurring Revenue (ARR): ARR rose by 35%, reaching $1.349 billion, slightly exceeding projections of $1.34 billion.
• Margin Improvement: GAAP gross margins reached 76%, while non-GAAP gross margins stood at 78%, reflecting a 2 percentage point improvement in both metrics.
• Financial Results:
o GAAP operating loss narrowed to $47.4 million, down from $54.8 million a year ago.
o Non-GAAP operating income reached $33.9 million.
o Adjusted free cash flow margins improved significantly to 10% for the quarter.
• Earnings per Share (EPS): Samsara reported adjusted EPS of $0.08, doubling analysts’ expectations of $0.04.
Analysis of Results
1. Remarkable Growth: With an average annual revenue growth rate of 46% over the past three years, Samsara consistently outperforms most technology companies.
2. Revenue Quality: While ARR grew slightly slower than total revenue (36.6% vs. 35.6%), it remains a reliable, high-margin source of income.
3. Innovation and Resilience: Samsara continues to invest in product development to meet the growing demand for modern data management tools, a rapidly expanding sector.
4. Projections: Analysts forecast 22.5% revenue growth over the next 12 months, indicating sustained momentum.
Guidance for the Next Quarter
For the fiscal fourth quarter, Samsara projects revenue of $335 million at the midpoint, slightly below analysts’ expectations of $335.8 million. While this guidance may disappoint some, it nonetheless reflects continued growth for the company.
Conclusion
At Pratte, we see Samsara as a high-potential company in the tech sector. With an impressive 36% revenue growth, notable margin improvements, and a 35% increase in ARR, the company demonstrates operational strength and an ability to exceed expectations. Although the next quarter’s guidance slightly underwhelmed some investors, Samsara’s expanding customer base and strategic innovations, such as non-motorized asset tracking, position it as a key player in IoT and AI.
With the stock up 57% year-to-date, Samsara offers promising long-term prospects. We seized the opportunity to acquire shares this morning, taking advantage of the temporary dip following the quarterly results, to strengthen our portfolio. This decision aligns with our strategy of selecting innovative and high-performing stocks that deliver sustainable value to our clients.
Markets in Brief
Monday
• NASDAQ: +0.97%, closing at 19,403.95 points, reaching a new all-time high.
• S&P 500:+0.24%, ending at 6,047.15 points, marking the 54th record of the year.
• Dow: -0.29%, down 128.65 points, closing at 44,782.00.
Technology giants led the session with significant gains among semiconductors and major players like Meta. Investors are favouring companies with low debt as they anticipate prolonged high interest rates.
• Broadcom: +2.73%.
• AMD: +3.56%.
• Qualcomm: +2.84%.
• Meta (META): +2.58%.
ISM Manufacturing Index
The ISM Manufacturing Index rebounded in November, hitting its highest level since June, driven by increased employment and new orders. This supports the notion that the Federal Reserve may maintain a cautious approach to adjusting interest rates.
Intel: Unexpected CEO Departure
The sudden resignation of Pat Gelsinger, Intel’s CEO, caused significant volatility in the stock, which initially surged before closing down 0.50%. The announcement highlights the challenges in restructuring and repositioning the company within the semiconductor market.
November Market Recap
November was particularly positive for U.S. markets.
• Dow Jones: +7.5%.
• S&P 500:+5.7%.
These gains were fuelled by a postelection rally following Donald Trump’s presidential victory and Republican control of Congress. Small-cap stocks were among the biggest winners, as investors anticipated potential tax cuts from the Trump administration. The Russell 2000 soared by over 10%, marking its best monthly gain of the year.
Stocks in Brief
• NVIDIA (NVDA): +3.5%, driven by strong demand for AI-related products.
• Super Micro Computer (SMCI): +28.7%, after a special committee confirmed the accuracy of its financial statements.
• Tesla (TSLA): +3.46%, benefiting from record sales in November.
• ExxonMobil (XOM): -1.8%, affected by declining oil prices.
• General Motors (GM): -0.99%, weighed down by the sale of its stake in a Michigan battery plant.
• S&P/TSX: Down 57.67 points to close at 25,590.33, dragged by weaker energy stocks.
Commodities Market
• Crude Oil: Up $0.10 to $68.10 per barrel.
• Natural Gas: Down $0.15 to $3.21 per million BTUs.
• Gold: Fell $22.50 to $2,658.50 per ounce.
• Copper: Slipped $0.01 to $4.13 per pound.
• Canadian dollar: Traded at 71.14 cents USD, down from 71.38 cents USD on Friday.
Tuesday
• S&P 500:+0.05%, closing at 6,049.88 points, marking its 55th record of the year. Since the November 5th presidential election, the index has gained 4.6%.
• NASDAQ: +0.40%, ending at 19,480.91 points, another new high, up 5.7% since the election.
• Dow: -0.17%, losing 76.47 points, to 44,705.53. The index remains up 5.9% post-election.
Post-Election Rally
U.S. indices continued their strong recovery after Trump’s victory, buoyed by expectations of business-friendly policies, including tax cuts and deregulation. Analysts note that after an exceptional November, with the Dow up 7.5% and the S&P 500 up 5.7%, December’s gains may be more limited.
Economic Data
Job openings in the U.S. hit 7.74 million in October, surpassing expectations of 7.5 million, reinforcing optimism about economic resilience. Investors are now focused on Friday’s labour report, which could influence the Federal Reserve’s upcoming interest rate decision.
Stocks in Brief
• AT&T: +4.6%, boosted by a share buyback plan.
• U.S. Steel: -8%, following comments about its acquisition strategy.
• Tesla (TSLA): -1.6%, impacted by a court decision overturning Elon Musk’s compensation plan.
• Scotiabank: -3%, due to weaker-than-expected earnings.
• S&P/TSX: Up 45.40 points to 25,635.73, gaining 0.18%.
Commodities Market
• Crude Oil: Jumped $1.84 to $69.94 per barrel.
• Natural Gas: Fell $0.17 to $3.04 per million BTUs.
• Gold: Rose $9.40 to $2,667.90 per ounce.
• Copper: Gained $0.13 to $4.20 per pound.
• Canadian dollar: Stable at 71.14 cents USD.
Wednesday
• S&P 500:+0.61%, closing at 6,086.49 points, a new all-time high.
• NASDAQ: +1.30%, ending at 19,735.12 points, also reaching a record.
• Dow: +0.69%, gaining over 300 points to close above 45,000 for the first time.
Technology Drives Market Gains
The technology sector led the session, with strong performances from cloud, e-commerce, and semiconductor giants.
• Salesforce (CRM): +10.99%, driven by better-than-expected earnings and a focus on artificial intelligence, boosting investor confidence.
• Nvidia (NVDA): +3.48%, nearing its all-time high.
• Amazon (AMZN): +2.21%, hitting an intraday record.
• Microsoft (MSFT): +1.44%, continuing its upward trend.
Comments from Jerome Powell and Rate Cut Expectations
At the New York Times DealBook Summit, Federal Reserve Chair Jerome Powell described the U.S. economy as in “remarkably good shape.” This bolstered expectations for a 25 basis point rate cut at the Fed’s December 17–18 meeting, with a 77% probability according to CME FedWatch data. However, Powell urged caution regarding the path for future rate cuts.
Mixed Economic Data
• ADP Employment Report: Revealed 146,000 private sector jobs added in November, below the 150,000 expected.
• Services PMI: Showed a slowdown in activity for November.
These data points pushed the 10-year Treasury yield down to 4.18%, compared to 4.22% the previous day.
Bitcoin Nears $100,000
Bitcoin approached the $100,000 mark for the first time, hitting an intraday high of $99,655.50, supported by the appointment of Paul Atkins, viewed as crypto-friendly, as head of the Securities and Exchange Commission.
Stocks in Brief
• Salesforce (CRM): +10.99%, driven by strong financial results and an AI-focused strategy.
• Nvidia (NVDA): +3.48%, nearing its record high.
• Amazon (AMZN): +2.21%, after reaching a new intraday high.
• General Motors (GM): -0.56%, affected by asset impairments.
• Chevron (CVX): -2.22%, declining alongside commodities.
• S&P/TSX: +0.02%, making slight gains.
Commodities Market
• Canadian dollar: Slightly down to 71.09 cents USD.
• Crude Oil: Fell by $1.40 to $USD 68.54 per barrel.
• Natural Gas: Slightly up, remaining stable at $USD 3.04 per million BTUs.
• Gold: Gained $8.30 to reach $USD 2,676.20 per ounce.
• Copper: Dropped less than a cent to $USD 4.20 per pound.
Thursday
• Dow: -0.55%, closing at 44,765.71 points.
• S&P 500:-0.19%, ending at 6,075.11 points.
• NASDAQ: -0.18%, settling at 19,700.26 points.
The New York Stock Exchange experienced a consolidation session on Thursday, with investors adopting a cautious stance ahead of the monthly employment report scheduled for release on Friday. This report is expected to significantly influence the Federal Reserve's upcoming decisions during its December 17-18 meeting. Economists predict 200,000 job additions in November, compared to just 12,000 in October, a figure impacted by hurricanes Milton and Helen.
Investors remain cautious ahead of this key data release, which could set the tone for the markets through the end of the year. In the bond market, the yield on 10-year U.S. Treasury bonds held steady at 4.18%, reflecting a wait-and-see approach. According to Aaron Clark of GW & K Investment Management, barring a major shock in the employment numbers, the current market trend, marked by strong buying pressure, is likely to continue, supported by year-end stock buybacks.
Stocks in Brief
• Intel (INTC): -5.28%, continuing its decline after the CEO’s surprise resignation, bringing year-to-date losses to over 58%.
• UnitedHealth (UNH): -5.21%, weighed down by the fallout from the tragic death of its executive.
• American Airlines (AAL): +16.80%, soaring on revised upward earnings forecasts, supported by robust demand and higher fares.
• Tesla (TSLA): +3.23%, benefiting from budget discussions in Congress involving Elon Musk.
• Nvidia (NVDA): +1.80%, continuing to rise on favourable AI sector prospects.
• S&P/TSX: +0.15%, supported by gains in energy and utility sectors.
Commodities Market (New York)
• Canadian Dollar: Gained to 71.24 cents USD, up from 71.09 cents USD on Wednesday.
• Gold: Rose $8.30 USD, reaching $2,010 USD per ounce.
• Crude Oil: Slightly down by $0.75 USD, to $75.15 USD per barrel.
Friday
At midday Friday, U.S. markets were up, buoyed by a stronger-than-expected November jobs report.
• Dow: +0.10%, adding 17 points to 44,782.71.
• S&P 500:+0.35%, rising to 6,096.75.
• NASDAQ: +0.66%, reaching 19,829.70.
Key Economic Data
• Jobs Added: 227,000 in November, surpassing the 214,000 forecast.
• October Revisions: Revised up to 36,000 from 12,000.
• Unemployment Rate: Edged up slightly to 4.2%, in line with expectations.
These results reinforced the expectation of a rate cut, with a probability of 87% compared to 71% the previous day.
Stocks in Brief
• UnitedHealth (UNH): -3.60%, still affected by the tragedy involving its executive, now demoted in weighting within the Dow Jones behind Goldman Sachs.
• Lululemon (LULU): +18.12%, driven by strong results reflecting a significant recovery.
• Archer Aviation (ACHR): +5.61%, benefiting from strategic partnerships in the electric flying taxi sector.
• Ulta Beauty (ULTA): +12.02%, supported by raised earnings forecasts.
• Coinbase (COIN): +2.07%, gaining as Bitcoin approaches $100,000 again.
• Tesla (TSLA): +0.88%, advancing on favorable political discussions led by Elon Musk.
• S&P/TSX: +0.15%, supported by gains in technology and energy sectors.
New York Commodities Exchange:
• Canadian Dollar: Rose to 71.24 cents USD, up from 71.09 cents USD on Wednesday.
• Gold: Gained $8.30 USD, reaching $2,010 USD per ounce.
• Crude Oil: Slightly fell by $0.75 USD, settling at $75.15 USD per barrel.
• Copper: Held steady at $4.20 USD per pound.
Conclusion
This week, U.S. markets showed contrasting moves, with the S&P 500 and NASDAQ reaching new records early in the week, followed by some profit-taking and cautious sentiment ahead of the November jobs report. The week ended on a positive note, supported by solid economic data and growing expectations for further monetary easing at the Federal Reserve’s December meeting.
The favourable seasonal trends and the resilience of the markets make this an excellent time to invest, as the bullish momentum is likely to continue through the end of the year. Feel free to contact us to discuss your investments and explore opportunities tailored to your financial goals.
