Samsara (NYSE: IOT) stock is plunging in Friday's trading following the company's earnings report. The Internet of Things (IoT) company's share price was down 17.3% as of 12:30 p.m. ET.
Samsara published its Q4 results yesterday and actually delivered sales and earnings that beat Wall Street's targets. But the company's forward guidance came in a bit below the market's expectations, and investors are concerned about slowing growth and softening margins.
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Samsara stock falls despite Q4 beats
Samsara posted non-GAAP (adjusted) earnings per share of $0.11 on sales of $346.29 million in the fourth quarter, which came in ahead of the average analyst estimate's call for per-share earnings of $0.07 on sales of $335.6 million.
Sales were up 25.3% year over year in the period, and adjusted earnings per share saw a big improvement over the profit of $0.04 posted in the prior-year quarter. All in all, it was a good quarter for the business, but investors are seeing warning signs in the company's guidance.
What's next for Samsara?
For this year, management is guiding for sales to come in between $1.523 billion and $1.533 billion, with the midpoint of that guidance range falling a bit short of the average Wall Street target's call for sales of $1.53 billion. Meanwhile, adjusted earnings per share are projected to come in between $0.32 and $0.34, which is well ahead of the average analyst estimate's call for adjusted earnings per share of $0.28.
But some investors were looking for a significantly stronger sales forecast to support the company's growth-dependent valuation. They are also concerned about the high level of stock-based compensation that is backed out of the adjusted earnings forecast.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Samsara. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
