Samsara Inc. Q1 FY2026 earnings call

• Samsara delivered strong Q1 with $1.54 billion in ARR, growing 31% year-over-year adjusted for constant currency. - Partnered with large organizations like 7-Eleven, Dallas-Fort Worth Airport, and a large U.S. county. - Customers focused on safety, preventative maintenance, and asset utilization; using AI for operations. - AI-powered safety solutions and maintenance solutions discussed with examples like Sterling Crane. - OEM integrations with Hyundai Translead, Stellantis, and Rivian to enhance customer experience. - Non-GAAP gross margin was 79% in Q1, non-GAAP operating margin 14%, adjusted free cash flow margin 12%.

Samsara's Q1 FY '26 ended with $1.54 billion in ARR, growing 31% year-over-year. Revenue was $367 million, up 31% year-over-year. They had 2,638 customers with over $100,000 in ARR, a 35% year-over-year growth. ARR per 100,000-plus customer was $338,000, and ARR mix from $100,000-plus ARR customers was 58%. International net new ACV contributed 18%. Construction had the highest net new ACV mix for the seventh consecutive quarter, transportation had its highest year-over-year growth in over 4 years, field services had its highest quarterly net new ACV mix in over 5 years, and public sector had its highest year-over-year growth in over 3 years. Equipment monitoring saw fourth consecutive quarter of year-over-year net new ACV growth.

• Q2 revenue expected between $371 million and $373 million, 24% year-over-year growth, non-GAAP operating margin 9%, EPS $0.06-$0.07. - Full year FY '26 revenue expected between $1.547 billion and $1.555 billion, 24% year-over-year growth, non-GAAP operating margin ~13%, EPS $0.39-$0.41.

• Macro uncertainty causing elongated sales cycles on some transactions. - Tariff impacts leading to customers prioritizing spending on tariff-impacted goods, creating timing risk for deals.

Q: Maybe just the first one, with regards to the sales cycle elongation commentary, maybe just talk about -- you mentioned, I think, some of those deals closed in May, just the quality, the duration of those deals, the size of those deals in terms of were they the same as originally constructed? And maybe just also talk a little bit about the pipeline construction in this period? Is it kind of back to normal or maybe just a little bit of those impacts?

A: Yes. So I would say the construction of the deals didn't change. We ended up closing a number of them in May. I don't think it makes sense to kind of fully quantify the amount from Q1 into Q2 because there's still a lot of macro uncertainty that can create more timing risk when deals close. I think I would say in Q1, it was more than hundreds of thousands. It was in tens of millions. It was a multimillion dollar impact. On the pipeline point, the pipeline was good. We had a record pipeline generation quarter in Q1. These are enterprise sales cycles, so that they take time to kind of play out. But I think it goes more to just demonstrate the point that customer demand remains strong.

Q: Congratulations on a strong start to the fiscal year. I was looking to drill down into a couple of Alex's 12 questions that he asked on his prior question. One on the sort of deal cycle elongation. You guys are selling a broader solution into the end customer. You're seeing more attach across multiple products. You're doing more with sort of like bigger deals. How do you sort of tell the difference between what's like a macro-related deal cycle elongation versus just like deal cycle elongation from having to sell a bigger deal and having to sell a more sort of integrated set of technologies?

A: I mean it's just having direct conversations with customers, like Liberation Day hits, higher tariffs come on board than I think what anyone kind of expected and then customers saying, "Hey, I'm buying a lot of tariff-impacted vehicles and assets and other equipment, and I'm focused on prioritizing my strategies and how I'm going to purchase these things, and that becomes kind of a near-term concern because those are assets that they ultimately use to drive revenue. And so hey, I still plan on digitizing my operations. I understand that there's real ROI here, and I'm excited about the payback period. But in this kind of period of uncertainty, I need to make sure that I'm focused on some of these tariff-impacted goods, and that can just delay conversations.

Q: On a nice start to the year. Sanjit, I was just wondering, can you talk a little bit about whether just AI in general is coming into the conversations with your clients? I realize they're really looking to have you guys help them with their operations with safety. But I'm just kind of curious about the role AI is now playing in those conversations as it's become just a bigger part of the broader zeitgeist in IT.

A: Yes, Kirk, I think absolutely, everyone that I've spoken with has interest in AI, and they see it as a transformational technology. That being said, our customers are really focused on clear and fast ROI. These are industries where they have a lot of operational complexity and they're looking for what can I really do with this AI. We've shown that with safety. We're able to really show that now on the efficiency side where we can really help you find signals and patterns in the data by having AI crunch through it. and then using our kind of vast data asset, as I was talking about with the workflow side of things. So I think they're very interested in AI as a technology, but really as it applies to their operations and then what sort of savings can it help drive or what kind of risk can it help reduce.

Q: James Edward Fish: Sanjit, circling back on the OEM side, how should we think or how should we expect both the exclusivity you have with the 3 that you have versus what you are looking to do with other OEMs? And could we see more partnerships? And then, Don, for you around this, and I know Keith has multiple questions here asked around near-term gross margins. How should we think about the impact more longer term...

A: Sure. I'll cover the product side of things. So OEMs, more broadly speaking, are embedding this connectivity. They're doing it largely for their own reasons. They want to basically be able to service these assets more efficiently and get information back into the cloud. So that's where the partnerships lie is directly with the OEM. It's kind of a cloud-to-cloud connection. The majority of these partnerships are not exclusive. And I think it is just part of this kind of connected data strategy that many of them have. That being said, our customers are looking for a single pane of glass. They want to not just see their trucks, but their construction equipment, their refrigeration units, they want to see it all in one place. And that's really unique in terms of what we're able to offer in terms of the scale and breadth. We have a large number of these OEM partnerships, and that's going to continue to be our strategy is get more folks on to the cloud.

Q: Daniel William Jester: Great. Maybe on the international side, great to hear the momentum in the business there. Maybe it's tough to break out, but I'd love just to hear your perspective on how much of that has just been from you building sales capacity in those regions versus some sort of discrete regulatory things that seem to be happening in Europe.

A: Yes, I'll take that one. We have been investing in the region for some time. We're excited to see 18% of net new ACV come from international. Europe has been a good driver of that. So we have achieved the product market fit, and that's been over a couple of years. I wouldn't say that there's any specific new regulatory tailwind other than now we're seeing more interest in digital technologies and digital transformation than maybe we were seeing 5 years ago.

Q: Matthew John Bullock: I wanted to ask a quick one on the upgrade program you launched this quarter. Are there any incremental details you can provide on the program? Has it catalyzed conversations on potential displacements? Did it contribute to the pipeline expansion you saw in 1Q? And then anything on incremental discounts through the program would be helpful.

A: Sure. So what we've been doing for a couple of years is helping customers do the transition. Some of these customers have legacy providers that they've been working with. They might be frustrated or looking for more functionality. And so in a number of these arrangements, that are 3- to 5-year contracts. As customers are coming towards the end of them, we've helped buy out the contracts. So really, this program is kind of making that a little more templatized, making it an easier on-ramp. So that's the context there. And in this macroeconomic environment, I think people are looking to find ways to go drive that efficiency, find those savings, and we want to make it easy for them to pick up Samsara and adopt it. That would be the high level. I don't think it's fundamentally changed the discounting and deals or anything like that. It's really just kind of made it easier for customers to understand we have an option for them if they're currently under contract with somebody else.

Q: Dylan Tyler Becker: Maybe, Sanjit, for you, on the predictive or preventative piece, I wonder how you think about maybe in a tightening macro, kind of the growing importance with fewer excess assets out there, the kind of the strategic value of that solution as maybe customers think about optimizing kind of throughput and run time of existing assets and ensuring that those are fully operational for maybe as long as possible.

A: I think you put your finger on it. So this is exactly what we're hearing from customers is in this kind of environment where equipment is becoming either more expensive to procure, lead times might be changing, they're really trying to drive up utilization and get as much value as they can and perhaps run these assets a little bit longer by maintaining them in a smarter way. So our technologies really help with both of those. Dominic mentioned this with asset tags, but our connected equipment portfolio in general, we help you understand what assets are being used where, how often should you rebalance them. And then as we're going deeper with our work in AI as it relates to fault codes and kind of diagnostics, that's an area where we can help you essentially extend the lifespan or the effective use life of these assets.

Q: Mark William Schappel: Sanjit, I was wondering if we could just circle back on the international opportunity. It's good to see the strength in Europe this quarter. I was wondering if you could give us a better sense, though, of where Europe is with respect to the U.S. in areas such as like video-based safety or next-gen telematics. How far behind, for example, are they in your view? And also, too, do you see a different set of competitors over there?

A: Sure. So I would say, first of all, our presence in the European market is a little uneven in the sense that we've been in the U.K. and Ireland the longest, and that's where we have the most presence there. There's, I think, good acceptance of video-based safety. They're very comfortable with connected cameras. And really, what's different is perhaps how mature their driver safety coaching programs are and things like that, but they're not very far behind. It's very similar to what we see in the U.S. It's a little different on the continent in terms of in France and Germany, those are newer markets for us. We're making good headway there. And I think there, we've also seen certain industry verticals pick up the technology a little bit sooner and faster. And so I would say it still feels relatively early for us as we're a couple of years in the market. And I think -- I don't know, Dominic, if you want to add anything on Europe?

Q: Alexander James Sklar: Great. Can you all hear me? Yes. All right. Sorry about that. So on the dollar-based net retention, 115%, again, another strong quarter. Is that still the right anchor for the rest of the year? And then when you look at the drivers behind that, any change in terms of contribution from growth in vehicles or units versus solutions versus kind of pricing at renewal?

A: No, yes. I think that's still our target for the year. We were able to achieve that in Q1, and that's what we're expecting for the rest of the year. Similar to in previous quarters and years, more of our expansion tends to come from upsells of existing licenses. So customers will land with multiple products out of the gate, but they'll just do it on a subset of their assets or their workers. And then over time, they'll come back and they'll buy more licenses of their existing products across a broader set of assets, whether it's geographies or different operating companies. And that's what we saw in Q1.

Q: Junaid Hamid Siddiqui: Sanjit, I just wanted to ask about the adoption of some of your products around worker experience like workflows and training and how they're contributing to increased platform sales.

A: Sure. So on the workflow side, I mentioned earlier, there are some fairly standard workflows that we see hundreds of millions flow through our system on. So good adoption of those kind of digital technologies. I think there's increasing sort of awareness among the frontline workers in the market that digital is better. It's a better experience for them. They can attach photos from their smartphone and so on. So that's been really strong. We've enhanced that with some more recent AI functionality where we can now -- it's a visual intelligence feature where we can understand what exactly is in a scene from a photograph. So that's an area where we're seeing a lot of interest. And on the training side, that's really part of this broader worker safety push that I was talking about earlier. You can see risk reduction come from in-cap coaching. You can see it come from sit-down coaching as well. But then being able to do relevant trainings, especially on a mobile device, especially in context of what's happened, that results in additional risk reduction, and we're seeing customers start to realize that, and that's drawing some of the sales through.

Q: Alexei Mihaylovich Gogolev: Thank you, Mike. Sanjit, I had a question about this massive win with one of the largest counties. You've already provided broader public safety examples, but anything specific about that customer? What were the features that this customer was looking for? And was that decision perhaps related to the natural disasters in the area?

A: Sure. I would say there's really kind of 2 key use cases in that specific example. One is around just driving higher levels of efficiency. That's a better understanding of asset utilization, reducing areas like fuel consumption. So that would be one kind of cluster of interest from the customer. I will say for some of these counties that are in hazardous areas where they get affected by natural disasters, being able to locate assets like generators, for example, after a storm is very valuable. And then we shared a case study of the City of New Orleans, for example, they're trying to keep their citizens safe, being able to know where all these teams are at all times is helpful, especially in a disaster scenario. So efficiency, but also being able to be reactive and responsive for their citizens.