Samsara IPO: Could the IoT Company Reach a $10 Billion Valuation?

Samsara's IPO and Valuation

Samsara has successfully secured substantial private investment, often at significant valuations. For instance, in 2018, TechCrunch reported a $100 million funding round, resulting in a $3.6 billion company valuation for the IoT platform provider.

With Samsara now preparing for its initial public offering (IPO), questions arose regarding its ability to surpass previous private valuations. Initial indications suggest a positive outcome in this regard.

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A recent SEC filing reveals Samsara’s anticipated IPO price range of $20 to $23 per share. This pricing suggests a valuation exceeding its final private valuation established in 2020.

This analysis will compare Samsara’s private and potential public valuations. We will also examine its revenue multiples to assess its market position and overall value. A detailed exploration of Samsara’s business model is available elsewhere; our current focus is on the resulting financial figures.

Valuation Breakdown

Here's a summary of the key valuation points:

• 2018 Funding Round: $100 million raised at a $3.6 billion valuation.
• Final Private Valuation (2020): A benchmark for comparison with the IPO.
• Expected IPO Price: $20 - $23 per share.
• Potential Public Valuation: Expected to surpass the 2020 private valuation.

Understanding these figures provides context for Samsara’s growth and market perception. The company’s ability to achieve a higher public valuation demonstrates investor confidence.

Further investigation into Samsara’s revenue multiples will offer additional insights into its financial health and future prospects.

Assessing Samsara’s Valuation at $23 Per Share

The valuation of Samsara appears substantial, particularly at a price of $23 per share. According to the company’s most recent S-1/A filing, Samsara anticipates having 505,604,713 shares available after its initial public offering (IPO) of 35,000,000 shares, with an additional 5,250,000 shares reserved for underwriters’ potential purchases.

Consequently, the initial IPO valuation for the company ranges between $10.1 billion and $11.6 billion.

A more comprehensive share count leads to increased valuation estimates. Renaissance Capital’s calculations, based on a fully diluted share count, place Samsara’s value at $11.6 billion when priced at the midpoint of $21.50 per share. Projecting this upward, a share price of $23 suggests a fully diluted valuation of approximately $12.4 billion for Samsara.

Considering the company’s last funding round in mid-2020, which valued it at $5.4 billion according to Crunchbase data, Samsara is poised to significantly exceed its previous private valuation, regardless of the final IPO price or share count method.

The central question now becomes: is this valuation justified, or is Samsara considered expensive at these levels?

Exploring the Valuation

Determining whether Samsara’s valuation is reasonable requires further analysis. The significant increase from its $5.4 billion valuation in 2020 indicates substantial growth expectations are already factored into the current price.

The fully diluted share count is a crucial factor in assessing the true valuation. It accounts for all potential shares, including those reserved for employees and future issuances.

Understanding the company’s revenue multiples and comparing them to peers in the connected operations space will provide further insight into whether the $12.4 billion valuation is warranted.

Key Considerations

• Share Count: The number of outstanding shares significantly impacts the overall valuation.
• Growth Potential: Investors are likely pricing in substantial future growth for Samsara.
• Market Comparables: Analyzing similar companies will help determine if the valuation is in line with industry standards.

Ultimately, the perceived value of Samsara will depend on investor confidence in its ability to execute its growth strategy and maintain its competitive advantage in the rapidly evolving market for connected operations platforms.

Financial Performance of Samsara

Samsara reported revenues of $113.82 million for the quarter ending October 30, 2021. This represents a substantial 72% increase compared to the same quarter in the previous year.

Consequently, Samsara is currently operating on an annualized revenue run rate of approximately $455.3 million.

Considering its initial public offering (IPO) valuation, which ranged from $10.1 billion to $12.4 billion, Samsara’s current run rate translates to a multiple of 22x to 27x.

While these multiples aren't inexpensive, they aren't excessively high either. Recent market trends have shown a contraction in software multiples.

However, companies demonstrating strong growth, such as Samsara, are still capable of achieving higher revenue multiples in the current public market environment.

An upward revision to the pricing range or a final price above the current interval wouldn't be entirely unexpected. Further developments will be closely monitored.

The Samsara IPO, as it stands, provides several key insights:

• Valuations paid by private investors for unicorn companies in 2020 were often significantly lower than those accepted by public markets in subsequent quarters.
• This disparity has resulted in substantial returns for venture capitalists, particularly concerning the holding period of recent investments in companies like Samsara.
• The inclusion of hardware components does not necessarily preclude a positive reception in the public market.

Further details will be provided once the final pricing is determined. It’s also important to note that HashiCorp and Nubank are also preparing for their respective public offerings.

It remains uncertain whether Samsara will complete its pricing and begin trading before the year-end holidays, but it is anticipated that it will. Updates will be shared as they become available.