Samsara’s IOT margin expansion gained significant momentum in fiscal 2026, and the company appears well-positioned to sustain that trend into fiscal 2027. The company delivered strong operating leverage in fiscal 2026 as non-GAAP operating margin expanded to 17% from 9% in fiscal 2025, while fourth-quarter non-GAAP operating margin reached 21%, up from 16% a year ago.
Samsara expects the momentum to continue in fiscal 2027, with a 19% non-GAAP operating margin and 21-22% revenue growth. A key driver behind the improving profitability is Samsara’s ability to scale revenue faster than operating expenses. Fiscal 2026 revenues increased 30% year over year to $1.62 billion, while non-GAAP operating income more than doubled to $282.4 million.
The company continues to benefit from strong adoption among large enterprise customers, with ARR from customers contributing more than $100,000 annually, rising 37% year over year to $1.2 billion. Larger customers typically adopt multiple Samsara products, which improves platform monetization without proportionally increasing customer acquisition costs. Another important factor supporting margin expansion is disciplined expense management.
Samsara’s expanding mix of multi-product enterprise deployments also strengthens its long-term margin profile. In the fourth quarter, nine of the company’s top 10 net new ACV deals included two or more products, while six included four or more products. This demonstrates that customers increasingly view Samsara as a mission-critical connected operations platform rather than a point solution provider.
Implementation of new products and a deeper automation strategy may allow Samsara to generate higher incremental margins as software adoption increases across its installed customer base. Samsara’s strong enterprise momentum, expanding AI capabilities, disciplined cost structure and increasing operating leverage indicate that the company can likely sustain its margin expansion momentum in fiscal 2027.
How Competitors Fare Against Samsara
Samsara operates in a highly competitive market. Players include Motive, Lytx, Verizon VZ, Trimble TRMB and Geotab in the vehicle telematics space. To compete with these companies, Samsara is investing heavily in its operations, such as sales and marketing and research and development.
Verizon offers products like Connect Reveal, Connect Fleet and Connect Asset Tracking to address GPS fleet tracking, driver behavior monitoring, compliance and reporting for enterprise fleet management, equipment and trailer tracking. Trimble offers Fleet Management, Asset Tracking and Transportation Management System, coming head-on with Samsara’s offerings.
Samsara still bets on the video telematics market, which is underpenetrated. However, Trimble Video Intelligence and Verizon’s dashcams & AI video telematics pose a threat to it.
IOT’s Price Performance, Valuation and Estimates
Shares of Samsara have lost 15% year to date against the Zacks Internet - Software sector’s growth of 12.6%.
IOT YTD Performance Chart
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From a valuation standpoint, Samsara trades at a forward price-to-sales ratio of 8.43X, lower than the industry’s average of 3.75X.
IOT Forward 12-Month (P/S) Valuation Chart
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The Zacks Consensus Estimate for Samsara’s fiscal 2027 and 2028 earnings implies year-over-year growth of 21.4% and 23.5%, respectively. The estimates for fiscal 2027 and 2028 have remained unchanged in the past 60 days.
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Samsara currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).