Why IOT and DGII are poised to lead the IoT market in 2025 News ad

The Internet of Things (IoT) describes a network of electronic devices equipped with sensors to collect and exchange data over the Internet. It allows devices (things) to exchange data in real time without direct human intervention.

The concept has been around since the 1990s, but it did not gain significant traction until the advent of broadband technologies, low-power sensors, and smartphones. Thanks to 5G cellular networks, the Internet of Things has become a common reality.

IoT devices can range from smart home products such as thermostats, security cameras and home appliances to wearables such as fitness trackers. The Industrial Internet of Things includes sensors, cameras and devices that are built directly into the equipment. The collected data is used to monitor, analyze and improve processes. The Internet of Things continues to evolve through the integration of artificial intelligence (AI). Here are two IoT stocks that will continue to thrive in 2025.

1. Samsara: Using IoT for fleet management, asset tracking, and equipment monitoring.

If you’ve ever wondered what Samsara company. New York Stock Exchange: Internet of Things yes, just look at the stock symbol. The computing technology company provides a comprehensive approach to the Industrial Internet of Things, offering hardware devices such as cameras, telematics and tracking sensors, software as a service (SaaS) and a connected operations cloud. The company specializes in fleet management using artificial intelligence-enabled dash cams and real-time driver training, reducing the overall number of accidents by 29%. Samsara has captured 1% of the automotive telematics industry with a total addressable market (TAM) of over $19 billion. Major fleet operators and logistics companies such as Home Depot Inc. New York Stock Exchange: HD, XPO Inc. New York Stock Exchange: XPOSterling Crane and DHL use Samsara IoT products and services.

The popularity of blockbusters continues to accelerate

Samsara is still at the stage of hyperdevelopment. The company reported second-quarter fiscal 2025 earnings per share of 5 cents, beating analysts’ consensus estimates by 4 cents. Revenue grew 37% year over year to $300.2 million, beating consensus estimates of $289.53 million. Ending ARR grew 36% year over year to $1.264 billion. Number of Samsara customers with ARR greater than $100,000 increased 41% year over year annualized to 2133. The company has no debt.

Good outlook for FY2025 and expanding AI capabilities

Samsara expects third-quarter fiscal 2025 earnings per share of three to four cents, versus the consensus estimate of 3 cents. Revenue is expected to be between $309 million and $311 million, above the consensus estimate of $308.83 million. Fiscal fourth-quarter earnings per share are expected to be 6 cents to 7 cents, versus the consensus estimate of 6 cents, and revenue to be between $334 million and $336 million, versus the consensus estimate of $333.95 million.

Full-year 2025 earnings per share are expected to range from 16 cents to 18 cents, above the consensus estimate of 13 cents. Full-year 2025 revenue is expected to be between $1.224 billion and $1.228 billion, well above the $1.21 billion consensus estimate.

Samsara CEO Sanjeet Biswas said: “We work with our customers at scale, generating more than 10 trillion data points, 85 billion API calls and 70 billion miles driven through our platform annually. Our growing data resource provides more AI-powered insights so our clients can see clear, fast ROI. Every year, the impact we have on our clients continues to grow. We are excited about the prospects for decades to come.”

2. Digi International: IoT hardware and connectivity solutions.

While Samsara is failing in the fleet management segment, Digi International Inc. NASDAQ: DGII provides Industrial Internet of Things equipment and connectivity solutions for the mission-critical communications segment. The company offers IoT equipment such as routers, modems, systems on modules (SOMs) and gateways that enable devices to be connected in remote locations across a variety of environments. Its wireless IoT solutions include cellular, wide area network (LoRaWAN) and Wi-Fi for industrial and enterprise applications. Digi operates in more mature markets with slow adoption rates, such as smart cities, and is more focused on hardware sales. For this reason, they are experiencing a slowdown that may begin to accelerate in 2025.

Improvement occurs based on improvements in key indicators

Digi International reported fourth-quarter fiscal 2024 earnings per share of 52 cents, beating the consensus estimate by five cents. Net income doubled year-over-year to $12 million from $6 million last year. Gross margin was 61.1%, up 400 bps. on an annual basis. Adjusted EBITDA increased 5% YoY to $26 million. ARR increased 9% to $116 million. Cash flow increased to $26 million compared to $9 million last year. Revenue fell 6.2% YoY to $105.05 million, still ahead of the consensus estimate of $104.16 million. Net inventory fell to $53 million from $74 million last year.

Fiscal Q1 2025 Outlook Highlights Stability and Long-Term Potential

Digi International issued first-quarter fiscal 2025 earnings per share guidance of 46 cents to 50 cents above the consensus estimate of 45 cents. Revenue estimates ranged from $102 million to $106 million, versus the consensus estimate of $104.75 million.

CEO Ron Konezny emphasized that as demand for efficiency grows, more customers are relying on Digi’s value-added IoT solutions, which is reflected in their record ARR, which now represents approximately 27% of total revenue.

“Long-term demand for Digi’s offerings remains strong. However, global macroeconomic headwinds, particularly in industrial markets, continue to persist (eg, the PMI has contracted in 23 of the last 24 months). Although the time for making deals has already expired. stabilized, it is expanded compared to historical indicators. Our fiscal 2025 guidance projects our ARR to grow approximately 10%, while our revenue and adjusted EBITDA will remain flat year-over-year,” Konezny said.

Before considering Samsara, you should hear the following.

MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and Samsara wasn’t on the list.

While Samsara currently has a Hold rating among analysts, the top-rated analysts think these five stocks are Outperform Buys.

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