EPS of $-0.03 increased by 67.2% from previous year
Gross margin of 76.9%
Net income of -16.80M
"Our connected operations platform now sees approximately 20 trillion data points, 300 million digitized workflows, and 90 billion miles annually." - Sanjit Biswas
Samsara Inc. (IOT) Q2 FY2026 Earnings Analysis: Durable 30% ARR Growth, AI-Driven Platform Expansion, and Strong Free Cash Flow
Executive Summary
Samsara delivered a durable quarter of growth in Q2 FY2026, underscored by a 30% year-over-year increase in ARR to $1.64 billion and a revenue beat of 30% YoY to $391.5 million (31% in constant currency). The company highlighted ongoing success with large, complex enterprises, including Alaska Airlines, SRM Concrete, and a Fortune 1000 rental company, driving expansion across multiple product lines and a growing data asset. Core profitability improved meaningfully on a non-GAAP basis (gross margin ~78%, operating margin ~15%), while cash flow remained positive with a free cash flow margin of 11%. Samsara also emphasized its defensible data asset and AI-enabled product strategy as the engine of durable growth, aided by a broader partner ecosystem (350+ integrations) and accelerating international activity (15% of net new ACV from non-US geographies, led by Europe). Management signaled continued emphasis on large enterprise sales, cross-sell across an expanding product portfolio, and ongoing investments in AI and platform capabilities to sustain faster, more efficient growth trajectory.
In addition to the top-line strength, Samsara showcased meaningful product momentum, including 8% of net new ACV from new products launched in the past year (asset tags, connected workflows, maintenance, AI multicam, commercial navigation, etc.). The company reiterated guidance for FY26 of roughly $1.574–$1.578 billion in revenue (about +26% YoY) with a consistent 15% non-GAAP operating margin and 45–47 cents non-GAAP EPS for the full year, and Q3 guidance implying ongoing revenue growth around the mid-20s percentage range in USD terms. The quarter reinforces Samsara’s thesis that a defensible, data-driven AI platform can unlock rapid ROI for large operators across construction, public sector, and manufacturing, while successfully expanding internationally and advancing new product categories.
Key Performance Indicators
Revenue
391.48M
QoQ: 6.70% | YoY:30.41%
Gross Profit
300.98M
76.88% margin
QoQ: 6.08% | YoY:32.69%
Operating Income
-26.62M
QoQ: 19.95% | YoY:54.26%
Net Income
-16.80M
QoQ: 24.05% | YoY:66.14%
EPS
-0.03
QoQ: 24.62% | YoY:67.19%
Revenue Trend
Margin Analysis
Key Insights
ARR (end of Q2 2026): $1.64B, up 30% YoY; 100k+ ARR customers now contribute roughly $1.0B of ARR (59% of total ARR, up from 57% YoY, +35% YoY for this cohort).
1M+ ARR customers: about $1.471B ARR, with a quarterly net-new ARR addition of $105M (YoY +19%), representing over 20% of total ARR from this cohort.
Net new ARR: $105M in Q2, YoY +19%, reflecting accelerated sequential growth.
Revenue: $391.0M in Q2, +30% YoY, +31% in constant currency (CC).
Large deals: $71M+ net new ACV in Q2; 17 new $1M+ ARR customers (quarterly record).
Financial Highlights
Performance snapshot and YoY/QoQ context:
- ARR (end of Q2 2026): $1.64B, up 30% YoY; 100k+ ARR customers now contribute roughly $1.0B of ARR (59% of total ARR, up from 57% YoY, +35% YoY for this cohort).
- 1M+ ARR customers: about $1.471B ARR, with a quarterly net-new ARR addition of $105M (YoY +19%), representing over 20% of total ARR from this cohort.
- Net new ARR: $105M in Q2, YoY +19%, reflecting accelerated sequential growth.
- Revenue: $391.0M in Q2, +30% YoY, +31% in constant currency (CC).
- Large deals: $71M+ net new ACV in Q2; 17 new $1M+ ARR customers (quarterly record).
- New logos and product adoption: >1,000 net new core customers in Q2 (4th time in five quarters); 9 of top 10 new logos adopted two or more products, 8 of top 10 adopted three or more.
- International and verticals: 15% of net new ACV from non-US geographies, Europe strongest; momentum across construction, public sector, and manufacturing; 8% of net new ACV from new products launched in the past year.
- Margin and cash flow: Non-GAAP gross margin 78%; Non-GAAP operating margin 15% (up 9 pp YoY); free cash flow margin 11% (up 7 pp YoY);
operating cash flow: $50.2M; free cash flow: $44.2M; cash at period end: $281.5M; net cash position (net debt) ≈ -$181.3M.
- Guidance: Q3 revenue $398–$400M (≈ +23–24% CC); Non-GAAP operating margin 15%; Non-GAAP EPS $0.11–$0.12; FY26 revenue guidance $1.574–$1.578B; Non-GAAP operating margin 15%; Non-GAAP EPS $0.45–$0.47.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
391.48M
30.41%
6.70%
Gross Profit
300.98M
32.69%
6.08%
Operating Income
-26.62M
54.26%
19.95%
Net Income
-16.80M
66.14%
24.05%
EPS
-0.03
67.19%
24.62%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management takeaways from the earnings call, grouped by theme:
- Data asset and AI as growth engines: Sanjit emphasized Samsara’s defensible data asset and AI-driven product expansion, noting the platform now processes 20 trillion data points with 300 million digitized workflows and 90 billion miles analyzed annually, which underpins faster ROI and broader product adoption. He also highlighted the Beyond conference as a venue that showcased customer needs around AI infrastructure, safety, and labor challenges, reinforcing the strategic focus on durable, scalable value creation.
- Product momentum and open ecosystem: Sanjit highlighted multiple new features and products (asset maintenance, commercial navigation, route planning, AI multicam, worker safety) and the expansion of the partner ecosystem to over 350 integrations, underscoring a flywheel effect where data feeds into AI-enabled products and expands platform usage. Dominic noted 8% of net-new ACV from new products and cited Bonnie Plants’ large asset-tags deal as a key example of cross-sell into core platforms (telematics, safety).
- Large enterprise execution and international expansion: The call repeatedly stressed large, complex deployments with recurring multi-product adoption, including deals with Alaska Airlines and SRM Concrete. Dominic attributed part of the Q2 strength to lifting larger, earlier-stage deals (post-Liberation Day tariff implications resolved in Q2) and highlighted Europe as the leading non-US contributor to net new ACV growth, signaling a meaningful international expansion trajectory.
- Guidance and realism on deals: Management acknowledged longer and less predictable sales cycles with larger transactions, while signaling confidence in durable growth supported by data advantages and AI-driven innovation. Dom specifically cited the impact of near-term tariff conversations and the transitory nature of some Q1 delays now resolved in Q2, which adds credibility to the guidance given the market backdrop.
Our connected operations platform now sees approximately 20 trillion data points, 300 million digitized workflows, and 90 billion miles annually.
— Sanjit Biswas
This quarter, we signed our largest ever asset tags deal with Bonnie Plants, the largest US supplier and producer of vegetable and herb plants.
— Dominic Phillips
Forward Guidance
Outlook and assessment of management guidance and industry context:
- Near-term outlook: Q3 revenue guidance of $398–$400M implies mid-to-high 20s USD growth year over year (≈ 23–24% CC). Non-GAAP operating margin target of 15% and Non-GAAP EPS guidance of $0.11–$0.12 reflect continued operating leverage at scale as Samsara benefits from larger, more efficient sales and strong product mix.
- Full-year view: FY26 revenue guide of $1.574–$1.578B implies about +26% YoY growth, with 15% non-GAAP operating margin and $0.45–$0.47 non-GAAP EPS. The guide assumes ongoing durable growth from the large-ent segment, continued cross-sell across a broader product set, and a stable or improving mix toward higher-velocity, high-ROI use cases.
- Key growth drivers: (1) AI-enabled product differentiation that expands use cases (maintenance, asset tags, workflow automation, safety), (2) an expanding data asset that is not replicable from the Internet, (3) adoption in international markets (Europe’s acceleration), and (4) the growing ecosystem of integrations and OEM partnerships that improve data quality and time-to-value for customers.
- Risks and mitigants: Potential for elongated sales cycles in large deals, sensitivity to macro demand and IT budgets, tariff/regulatory dynamics, and competitive pricing pressure. Samsara’s mitigants include a broad product portfolio, multi-category ARR expansion, and a continued focus on ROI and rapid payback for customers. Key monitoring factors for investors: net new ARR trajectory, ARR mix by cohort (100k+ vs. 1M+), pace of new-product ACV, international contribution, and the hit-rate of large deals with multi-product deployments.
- Bottom line: The company’s durable growth thesis remains intact, supported by a defensible data asset, AI-enabled platform enhancements, and a scalable business model tied to physical assets that benefits from ongoing AI infrastructure investments in target end markets.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
IOT Focus
76.88%
N/A
N/A
N/A
S
74.50%
-39.90%
-4.23%
-25.87%
CFLT
72.40%
-46.00%
-10.30%
-25.35%
MDB
73.20%
-14.90%
-4.00%
-85.09%
GTLB
88.30%
-22.50%
2.01%
157.93%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Samsara’s Q2 FY2026 results reinforce a durable growth narrative built on a defensible data asset, AI-enabled product expansion, and an expanding ecosystem of customers and partners. The company’s ARR growth of 30% YoY to $1.64B, the dominance of the 100k+ ARR cohort (59% of ARR) and the sizable contribution from the 1M+ ARR cohort (>$1.47B ARR) demonstrate strong monetization of a multi-product platform. The 8% contribution of new products to net new ACV and the largest ever asset-tags deal with Bonnie Plants illustrate meaningful accelerants in cross-sell potential and use-case expansion. Management’s guidance, which targets FY26 revenue of roughly $1.57B and a steady 15% non-GAAP operating margin, implies confidence in operating leverage as Samsara scales.
Valuation and investment implications: Samsara trades at elevated revenue multiples (peer commentary indicates high price-to-sales ratios within this software/IoT space) but justifies premium if AI-driven differentiation translates into faster payback and higher installed-base stickiness. The company’s strong cash generation, net cash position, and growing free cash flow margin support a constructive long-term stance, particularly if AI-enabled products yield higher attach rates and improved retention among large, mission-critical customers.
Catalysts to watch include ongoing large-deal momentum and cross-sell traction among 100k+ and 1M+ ARR customers, continued international expansion, acceleration in new-product ACV contributions (targeting >8% of net new ACV from new products), and the successful integration of OEM/pre-delivery installations to shorten time-to-value for customers. Investors should monitor ARR growth by cohort, net retention, product mix shifts, and the cadence of large, multi-product deployments as primary inputs into the longevity of Samsara’s growth trajectory.
Key Investment Factors
Growth Potential
Growth drivers include a defensible data asset that enables AI-powered insights, expanding product portfolio (asset maintenance, commercial navigation, AI multicam, asset tags, connected workflows, etc.), and increasing cross-sell into large enterprises. With ≈$1B ARR from 100k+ customers (59% of total ARR) and >$1.471B ARR from 1M+ customers, Samsara is positioned to monetize AI-enabled product enhancements and drive higher net retention through deeper platform penetration. International expansion (15% of net new ACV from non-US) and 8% of net-new ACV from new products launched in the past year support an accelerant in growth, particularly in Europe and other large markets.
Profitability Risk
Key risks include longer sales cycles for large multi-product deals, tariff and macroeconomic variability affecting capex spend in end markets, competition and price competition in a crowded space, data privacy and regulatory compliance across geographies, and execution risk in integrating a rapidly expanding product suite and partner ecosystem. The company’s reliance on enterprise budgets and the capital-intensive nature of some customer segments could also temper growth if global IT budgets tighten.
Financial Position
Samsara maintains a strong liquidity position with cash and cash equivalents of $258.5M and total cash and short-term investments of $701.8M, a net cash position of approximately $-181.3M (net debt negative), and solid operating cash flow of $50.2M with free cash flow of $44.2M in the quarter. Deferred revenue remains substantial ($611.3M current, $129.2M noncurrent), underscoring a resilient subscription model. Non-GAAP gross margin at 78% and non-GAAP operating margin at 15% reflect meaningful operating leverage as scale grows, while R&D investment remains a key driver of innovation and future ROC.
SWOT Analysis
Strengths
Defensible data asset and AI-driven insights that differentiate Samsara’s platform
High ARR scale with 1M+ and 100k+ ARR cohorts (≈$1.471B and ≈$1.0B respectively)
Strong gross and operating margin progression on a non-GAAP basis (78% GM, 15% non-GAAP OM)
Large enterprise focus with multi-product sales and high net retention (core NR ≈115%)
Expanding partner ecosystem (350+ integrations) and OEM engagements
Significant international growth potential (15% non-US net new ACV, Europe momentum)