Samsara Inc.

Good afternoon and welcome to SAMSAR's first quarter fiscal 2026 earnings call. I'm Mike Chang, SAMSAR's Vice President of Corporate Development and Investor Relations. Joining me today are SAMSAR Chief Executive Officer and Co-Founder Sanjit Biswas and our Chief Financial Officer, Dominic Phillips. In addition to our prepared remarks on this call, additional information can be found in our shareholder letter, press release, investor presentation, and SEC filings on our Investor Relations website at investors.samsar.com. The matters we'll discuss today include forward-looking statements. Actual results may differ materially from those contained in the forward-looking statements and are subject to risks and uncertainties described more fully in our SEC filings. Any forward-looking statements that we make on this call are based on assumptions as of today, June 5, 2025, and we undertake no obligation to update these statements as a result of new information or future events unless required by law. During today's call, we'll discuss our first quarter fiscal 2026, financial results. We'd like to point out that the company reports non-GAAP results in addition to and not as a substitute for or superior to financial measures calculated in accordance with GAAP. Reconciliations of GAAP to non-GAAP financial measures are provided in our press release and investor presentation. We'll make opening remarks, dive into highlights for the quarter, and open up the call for Q&A. With that, I'll hand over the call to Sanjay.

Thanks, Mike, and thank you, everyone, for joining us today. Samsara delivered a strong Q1 of our new fiscal year, surpassing $1.5 billion in ARR. We ended Q1 with $1.54 billion in ARR, growing 31% year-over-year, adjusted for constant currency. During the quarter, we grew our customers with more than $100,000 in ARR by 154, an increase of 35% year-over-year. Our durable and efficient growth is a testament to the strength of our platform and our partnership with customers to address their critical needs. In Q1, we partnered with some of the largest organizations and physical operations, including 7-Eleven, the largest convenience store chain in the world, the Dallas-Fort Worth Airport, the second largest airport in the U.S., and one of the largest counties in the U.S., which has more than 10 million residents. We're proud to work with these industry leaders and help them operate smarter. Over the past few months, I've visited some of our top customers and prospects in North America and Europe. They're focused on a few key priorities. increasing the focus on safety to reduce accident payouts and lower insurance premiums, using preventative maintenance to extend the life of their equipment and reduce capital expenditures, and improve asset utilization to run smarter and more efficient operations. Across the board, our customers are digitizing their operations and using AI to help them get more out of their existing labor and assets. They're investing in technology to run safer, more efficient, and more sustainable operations. Our customers have large complex operations. They rely on commercial vehicles to move goods and services to power infrastructure. According to the National Highway Traffic Safety Administration, there are more than 500,000 accidents involving large trucks in the U.S. every year. Commercial accidents not only cause injuries, but are a source of reputational risk and potentially millions of dollars in insurance payouts and premiums. To better understand our customers' safety challenges, we surveyed more than 1,500 commercial drivers. They represent 21 industries spanning seven countries. We found that 79% have had a near miss while driving distracted, and 67% have experienced drowsiness while driving. When asked about how to reduce this risk, 95% of surveyed drivers agreed that coaching positively impacts their habits on the road. This shows the importance of technology to identify risk and help drivers avoid distractions on the road. Doing this at scale is a tremendous challenge. Our customers recognize that this is largely a data problem and they're using AI and automation to improve their safety. We built Samsara's AI-powered safety solutions to directly manage risk at enterprise scale. Our platform provides comprehensive AI alerts covering a wide range of safety concerns. This includes collision risk, traffic violations, policy violations, harsh driving, driver fatigue, speeding, and distracted driving events like mobile phone use, smoking, and eating and drinking. Our new intelligent safety inbox and AI-powered insights give our customers a smarter way to identify risk and coach drivers based on patterns, not just incidents. With high turnover rates and driver shortages, recognition is critical for our customers to keep their best drivers. We're doubling down on safety and recently launched new positive recognition tools within the Samsara platform. This includes streaks and milestones, personalized kudos, and shared visibility. These features use gamification to help our customers drive improvements in employee engagement and overall safety outcomes. We're excited to help our customers reduce risk, protect their workers, and save millions of dollars. I'd like to share an example of a customer using AI to improve their safety. In Q1, we partnered with one of the largest retail propane companies in the US. They have over 3,000 vehicles and 2,300 employees that deliver propane to residential, industrial, commercial, and agricultural customers. They also provide portable propane tank exchange operations. They first landed with Telematics in Q3 of fiscal year 24. In Q1, we had one of our largest expansions with them, signing a deal for Samsara's video-based safety. In a pilot, they saw a 75% reduction in safety events and a 71% reduction in mobile usage. From pilot to partnership, they said the key differentiator for Samsara was the impact of RAI on the safety of their operations. A large portion of our customers' operating budgets goes towards physical assets like vehicles, forklifts, cranes, and other equipment. These assets have hundreds of moving parts. They're put to heavy use under demanding conditions and inevitably break down over time. As a result, most organizations allocate about 10% of their operational budget for repairs and maintenance. In today's environment, our customers are focused on maximizing the value of their assets and optimizing maintenance spend. In particular, They're interested in extending the usable lifespan of these critical resources. Recently, they've been sharing feedback on the complexities of maintenance at scale, the impact of tariffs, and the challenges with resilience of their supply chains. To address this, they're seeking AI to drive proactive maintenance to improve the operations with healthier assets. We're helping our customers achieve their maintenance goals with our AI-powered maintenance solutions. At the core of our solution is our massive data asset that powers our AI. We have millions of assets on our platform that collectively travel more than 80 billion miles each year. This provides us real-world data on how assets run and how they break. We digitize all this information through real-time diagnostics and the nearly 230 million vehicle inspections we see annually. This real-world data powers our AI to provide unique insights on the severity of fault codes and common vehicle repairs. We can then help our customers transform these insights into action by starting a maintenance workflow using our work order creation forms with pre-populated data. We're just getting started on the maintenance journey with our customers and are excited for the opportunities ahead. I'd like to share an example of a customer using AI to transform their maintenance. Sterling Crane is one of the world's largest mobile crane rental companies. They rent, supply, and service cranes through 16 branches in Canada and have equipment across hundreds of job sites. They face unique operational challenges like maintaining cranes in remote locations and keeping their cranes road safe during Canada's difficult winters and wide-ranging terrain. With Samsara, they reduced their unplanned maintenance from 34% to 20%. This saved 10,000 hours of technicians' time, which equals to $500,000 of annual maintenance labor saved. They also report over $3 million saved in equipment maintenance and replacement costs, with over $2 million saved for on-road equipment and an additional $1 million saved on off-road equipment. We're proud to partner with Sterling Crane to help them save money and time and better maintain their assets. As we build for the long term, we're investing in our ecosystem through OEM relationships. Vehicle and equipment manufacturers are building modern assets that are pre-connected to the cloud right off the assembly line. To create a seamless customer experience, we're integrating directly with the OEMs so customers can deploy Samsara without installing any hardware. This helps our customers who have complex operations to simplify the digitization of their assets. This quarter, we continue to expand our ecosystem. First, we're partnering with Hyundai TransLead, a leading manufacturer of semi-trailers in North America, to improve trailer visibility. This marks our first OEM integration that supports Samsara's video-based safety features. Second, we're partnering with Stellantis, one of the world's largest vehicle manufacturers. We expect this integration will allow over 14 million vehicles to connect directly to Samsara's Connected Operations Platform. And third, we're partnering with Rivian, who is an electric vehicle leader, to streamline electric fleet management. We will integrate essential Rivian data directly into the Samsara platform and provide a single pane of glass. It was a strong start to the new fiscal year. We're grateful to our customers, partners, investors, and the Samsara team around the world for their shared commitment to increasing the safety, efficiency, and sustainability of the operations that power the global economy. We're excited for the year ahead. We're looking forward to seeing many of you at BEYOND, our annual customer conference and an investor day in a few weeks in San Diego. At BEYOND, we'll be bringing together leaders to discuss the state of physical operations and new ways to deliver value through data and AI. We'll also be announcing new products and features. We hope you can join us. I'll now hand it over to Dominic to go over the financial highlights for the quarter.

Thank you, Sanjit. Q1 FY26 was highlighted by strong top-line growth and continued efficiency gains. After a strong start to the quarter, we experienced instances of elongated sales cycles on some transactions in the period following Liberation Day in April, as some customers prioritized spending on tariff-impacted goods such as vehicles, equipment, and other assets. Despite the current macro uncertainty, we're encouraged that a number of these transactions closed in May, that we generated record pipeline in Q1, and that our win rates remain generally consistent and healthy, all of which signal continued strong customer interest in our platform and the clear and fast ROI it delivers. Q1 ending ARR was $1.54 billion, growing 31% year-over-year, both as reported and in constant currency. Q1 revenue was $367 million, growing 31% year-over-year, or 32% adjusted for constant currency. Several factors drove our top-line performance in Q1. First, we focused on serving large enterprise customers to drive efficient growth at scale. To better reflect the structure of our largest enterprise customers, who often have multiple subsidiaries and grow through M&A, we have adjusted our definition of a customer. Previously, separate entities within a larger organization were counted as individual customers. Our updated methodology counts affiliated entities within the same parent organization as a single customer. This better aligns with our current go-to-market strategy and how we assign customer accounts to our sales reps. Overall, this change has a small impact on our large customer-related metrics, and a more detailed comparison using the previous and updated methodologies can be found in the appendix of our investor presentation. We ended Q1 with 2,638 100K plus ARR customers growing 35% year-over-year, including a quarterly increase of 154 compared to 105 in Q1 one year ago. ARR per 100k plus customer increased to 338,000, and the combination of adding more large customers and a higher average ARR resulted in ARR mix from 100k plus ARR customers of 58%, up from 56% one year ago and 52% two years ago. Second, our customers are increasingly utilizing Samstar as a system of record for physical operations by subscribing to multiple applications on a single unified platform. 95% of our 100k plus ARR customers and 85% of core customers subscribed to two or more Samsara products, and 66% of our 100k plus ARR customers and 38% of core customers subscribed to three or more products. We also saw a number of large multi-product transactions in Q1. Eight of the top ten new logos in Q1 included at least two products, and five included at least three products. One of our largest new customers in Q1 was Knife River, a leading U.S. construction materials and contracting company operating across 14 states with over 5,700 employees. The company has made over 100 acquisitions over the last 30-plus years, helping revenue grow to more than $2.8 billion annually. Their initial purchase included video-based safety, telematics, and equipment monitoring. In a pilot study, they observed a significant reduction in total safety events, and AI coaching had an immediate impact on both distracted driving and seatbelt usage. And eight of the top ten expansions in Q1 included at least two products, and seven included at least three products. One of our largest expansions in the quarter was with a leading provider of vegetation management, line clearance, and electric utility line construction. This customer has expanded with us 15 times since becoming a customer in 2019. In Q1, they added more video-based safety, telematics, and equipment monitoring licenses, deploying Samsara on a recently acquired company. As a result of our strong expansion results, we achieved our target dollar-based net retention rate of approximately 115% under both the previous and updated customer count methodology. And third, we demonstrated strong execution across several frontier markets. 18% of net new ACV came from international geographies, which was tied for the highest quarterly contribution ever. The biggest area of international strength was Europe, which accelerated net new ACV growth sequentially and contributed its highest quarterly net new ACV mix ever. We also saw momentum across construction, transportation, field services, and public sector and markets. Construction drove the highest net new ACV mix of all industries for the seventh consecutive quarter. Transportation was our second largest vertical this quarter, achieving its highest year-over-year growth in over four years. Field services contributed its highest quarterly net new ACV mix in over five years. And public sector achieved its highest year-over-year growth in over three years, driven by wins with the state of South Carolina, city of Houston, and one of the largest counties in the United States. And last, we also saw strength in emerging products. Equipment monitoring accelerated year-over-year net new ECV growth for the fourth consecutive quarter, driven by another strong quarter from asset tags. In addition to driving strong top-line growth, we continued to deliver operating leverage across our business as we scale. Non-GAAP gross margin was a quarterly record 79% in Q1. Non-GAAP operating margin was 14% compared to 2% in Q1 FY25. and adjusted free cash flow margin was 12% in Q1 compared to 7% in Q1 last year. Okay, now turning to guidance, which is based on FX rates as of May 3rd. For Q2, we expect revenue to be between $371 and $373 million, representing 24% year-over-year growth, both as guided and in constant currency. Non-GAAP operating margin to be 9%, and non-GAAP EPS to be between 6 and 7 cents. For full-year FY26, we expect revenue to be between $1.547 and $1.555 billion, representing year-over-year growth of 24% or between 24% and 25% adjusted for constant currency, non-GAAP operating margin to be approximately 13%, and non-GAAP EPS to be between $0.39 and $0.41. And finally, please see the additional modeling notes in our shareholder letter. To wrap up, in Q1, we continued high growth at scale while also continuing to deliver operating efficiency gains. Looking forward, we believe we're well-positioned to continue delivering durable and efficient growth, and we're excited to continue helping our customers operate more safely, efficiently, and sustainably. And with that, I'll hand it over to Mike to moderate Q&A.

Thanks, Dominic. We'll now open the lineup for questions. When it's your turn, please limit your questions to one main question and one follow-up question. The first question today comes from Alex Zukin with Wolf, followed by Keith Weiss with Morgan Stanley.

Just taking the question, 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, you know, were they the same as originally? 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?

Yeah. 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, you know, there's still a lot of macro uncertainty that can create more timing risk when when deals close. I think I would say, you know, in Q1, it was, you know, it was more than hundreds of thousands. It wasn't tens of millions. It was, you know, it was a multi-million dollar impact. On the, you know, the pipeline point, you know, the pipeline was good. We had a record pipeline generation quarter in Q1. That doesn't necessarily obviously benefit us in Q1. These are enterprise sales cycle so that they take time to kind of play out. But I think it goes more to just demonstrate the point that customer demand, you know, remains strong. This is, you know, a large market. It's growing quickly. We're providing real tangible ROI, quick payback periods. And customers are interested in that. There's just a lot of, you know, macro uncertainty with, you know, tariff related news.

Got it. And then maybe as a follow-up, Sanjay, for you, the OEM investments and relationships were quite notable this quarter. Maybe just talk through the expanded opportunities as this opens up for you, maybe how it changes or strengthens your competitive positioning in the field and any other impacts we should think through or think about from those deals this year.

Sure, Alex. I think about it through the customer lens. We're just trying to make it as easy as possible for our customers to get their operations into the Samsara Connected Operations Cloud. This essentially makes it a cloud-to-cloud connection. So as they get delivery of these new vehicles, they're already easily populated up in our cloud. And that's been the strategy for a couple of years. We've been doing partnerships with light and heavy-duty manufacturers, yellow iron, so construction equipment like Caterpillar and John Deere, refrigeration manufacturers. So the whole idea is just get as much data in the cloud as possible. And we think that will help us get deeper insights into the performance of these assets and, like I said, just reduce friction in terms of how these things get turned on. Perfect. Thank you, guys.

The next question comes from Keith Weiss with Morgan Stanley, followed by Michael Turin with Wells Fargo.

Excellent. Thank you guys for taking the question, and 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 private question. One on the sort of deal cycle elongation, you guys are selling a broader solution into the end customer. You're seeing more attached 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.

I mean, it's just having direct conversations with customers, you know, like Liberation Day hits, higher tariffs, you know, come on board than I think what anyone kind of expected. And then, you know, customers saying, hey, I'm buying a lot of tariff impacted, you know, vehicles and assets and other equipment. And I, you know, focus on prioritizing, you know, 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, you know, 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 focusing on some of these tariff-impacted goods, and that can just delay conversations.

Got it. And then in the fall, were there specific verticals that you're selling into that you saw bigger impacts than others? And so which ones saw the bigger impacts?

No, I think it was, you know, widespread. I think, you know, across all of our end markets, you know, they're asset and people-intensive businesses. And so they're all purchasing, again, vehicles, heavy, you know, machinery, equipment, assets, you know, and, you know, a lot of those goods are impacted by tariffs.

Got it. And then just one on the margins. Gross margins continue to expand really well. Perhaps you could kind of unpack some of the drivers and how much room is there for further expansion there. And does the expansion of OEM relationships, like just being able to go kind of straight to the data and not have to put your data collection device in there, does that help with the gross margin trajectory?

I think it can in the future. It's not today. It's just it's not a material part of the business. You know, we're really excited about all these partnerships we have, and we can kind of meet customers where they are. If they've got, you know, connected vehicles and assets, we can pull that data directly in, you know, through an OEM cloud. If they don't, we can provide them a gateway or a device to ultimately collect the data into the cloud. And so as more and more customers have those assets, that can benefit them. On the gross margin side, I would just say we're really pleased with a quarterly record, 79%. I don't expect a lot of near-term leverage in gross margin. I think that we're rolling out a number of software-only SKUs in products, even things like asset tags. All of those are gross margin accretive. as those products scale, that can open up more opportunities for gross margin benefits in the future. And then, obviously, as we continue to scale and get larger, there's opportunities on the cost side as well to get more economies of scale.

Outstanding. Thanks for the time, guys. Thanks.

The next question comes from Michael Turin with Wells Fargo, followed by Matt Hedberg with RBC.

Hey, great. Thanks very much. Appreciate you taking the questions. We've I've been hinting at the macro, but if I listen to the prepared remarks and look at the letters, construction, seventh straight quarter of highest mix, public sector showing through as a stronger vertical. Can you just speak to what you're seeing within those emerging verticals that's resonating? specifically scenario we've gotten a lot of questions from investors around what you're enabling this, allowing just the product set to really resonate there.

Sure, I'll take that one. So I think across both construction and public sector, it's really being driven by a desire to increase efficiency, especially I've been spending a lot of time with some state and local customers and prospects, and they're all looking to find savings in operational budgets without having to cut down staff. And that might be something as obvious as fuel savings from putting telematics devices out there and reducing engine idling. And then it can also mean reducing insurance claims for some of these large municipalities. So that's kind of the practical side of things. I think that's unchanged given the macro environment. in terms of that interest, and really these are areas that haven't digitized as heavily as you might expect. So as we kind of look industry by industry, construction and public sector are both areas where they historically had not bought a lot of telematics or safety monitoring systems that were connected, and now they see the value in it and they're looking to digitize.

Excellent. Dominic, maybe just on a broader margin, as you mentioned, Work through a more fluid environment. Remind us how you approach the tradeoffs, signals you're watching, and how you're thinking about things like sales capacity within the current environment. Thank you.

Yeah, I mean, we are looking at kind of a, you know, forecast on a, you know, monthly and quarterly basis. And, you know, on sales capacity, we're really looking at kind of the productivity, you know, from the sales reps and if productivity is, you know, is in line with where it was in previous years or if it's up, that gives us confidence that we can continue to add more capacity. And we saw that in Q1. So sales productivity was good. We've been adding more sales capacity, and we plan to continue to do so throughout the year.

Thanks very much.

The next question comes from Matt Hedberg with RBC, followed by Kirk Maturin with Evercore.

Thanks, guys, for the questions. You know, Dom, you called out asset tags as part of the success you're seeing in equipment monitoring, and that's great to hear. I know it's still early, but, you know, when you are seeing wins, you know, can you talk about what it's doing to ACV, you know, at this point?

It depends on a given deal. In some cases, it can be kind of the leading product for the customer use case. In some cases, it could be an add-on. In many of the examples, customers are trying it out on kind of one subset of assets before they're rolling it out wall-to-wall. We haven't really seen any kind of full deployments across a set of assets. But kind of three consistent use cases that we're seeing. First, you know, lost or stolen assets. If an item is missing, being able to find it very quickly. Second is really around worker efficiency. So cutting down the time that it takes for a worker to go out and find an asset somewhere. And then the last one is really around utilization. So if these things are moving or being used, we can pick that up, and then it can help inform if customers should, you know, how they should manage their assets, if they need to buy more of them, or if they can redeploy them to other areas. So we're excited with the progress. You know, we've been selling it now for about a year, and, again, it's been a good point of strength for equipment monitoring.

That's great. And then, you know, you noted that net new grew 8% constant currency in one queue. And you're talking about kind of flattish or at least flattish net new for the remainder of the year. I'm curious, you know, post-liberation day and some of these deals that slipped, are you applying additional conservatism now to that guidance philosophy from an ARR perspective? Because, you know, previously we've talked about flat net new as well. So I'm just kind of curious on like sort of what the assumptions were in that net new commentary.

Yeah, I mean, I would say for net new, you know, where we provide some color in the modeling notes and revenue, you know, our guidance philosophy is similar to previous quarters. You know, we're trying to make sure that we're setting guidance with a lot of confidence, you know, and that accounts for various downside scenarios. If those downside scenarios don't ultimately play out, it has generally resulted in more outperformance, and you saw that obviously in Q1. So I think that's kind of how we're thinking about things. We feel good about being able to hit that even with downside scenarios, and if we don't see those come to fruition, you know, we'd like to be able to do better than that.

Got it. Thanks, Chris.

The next question comes from Kirk Mature with Evercore, followed by Jim Fish with Piper Sandler.

Thanks very much, guys, and congrats on a nice start to the year. Sanjay, 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.

Yeah, Kirk, I think absolutely. You know, 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.

That's super. And then just one follow-up for Dom, sort of similar in some other ones. But just, you know, visibility for you heading into the rest of the year. It sounded like you had a really good pipeline build quarter. Can you just talk a little bit about sort of visibility maybe, you know, today versus, you know, three months ago or just kind of how you're feeling about sort of the overall pipeline formation for the year?

Yeah, I mean, we're feeling good about the pipeline. Again, I think that taking a step back, like big market growing quickly, big opportunity for digital transformation, we add a ton of value for customers in terms of ROI, you know, very quickly. And I think the pipeline demonstrates the, you know, the customer demand and interest. I think the... visibility point is just around kind of what happens in the broader kind of, you know, macro environment and what impact does that have on our customers and therefore on their kind of near-term priorities. So I think near-term, you know, the macro uncertainty provides some timing risk to deals, but more medium and long-term, you know, we feel really good about the position and the momentum.

Great. Thank you. The next question comes from Jim Fish with Piper Sandler, followed by Dan Jester with BMO.

Hey, guys. Sanjay, circling back on the OEM side, how should we think – or how should we expect both the exclusivity you have with the three 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 and his multiple questions here, asked around near-term gross margins, how should we think about the impact more longer-term?

Recording in progress.

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 strategies, get more folks onto the cloud.

On the longer-term gross margin question, again, today it's not a significant part of our ARR of our net new ECU in any given period, and so not a lot of impact to gross margins. Medium and longer term, it could be beneficial. I would expect it to be more gross margin accretive than the offering where we provide a device. But we would need to see that part of the business scale up dramatically, and that's really driven by customer interest.

Got it. And look, you guys called out the highest growth on transportation in four years, I believe, in the prepared remarks. But who are the drivers of that? And I guess pun intended. Yeah.

You know, I would say in general, transportation is an industry where efficiency and safety are really top priorities, so they're continuing to digitize. We've been gaining market share among the top and, like, leading transportation companies, so I think we're becoming better known. It was another strong quarter. I think it was our second largest vertical. So we expect to see it continue to grow, and there's a lot of trucks out there.

Okay. The next question comes from Dan Jester with BMO, followed by Matt Bullock with B of A. Great.

Thanks for taking my question. 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.

Yeah, 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 five years ago.

Okay, great. Thank you. And then on the preventative maintenance piece, is that going to be something that's going to be targeted to specific types of businesses first, or do you think that that's going to be useful for the entire industry set in which you cover? Thank you.

Yeah, I think Dominic made the point earlier, but our customers across industries, they buy similar types of assets. If you think about the trucks, they show up with the same kinds of trucks in transportation as utilities and construction. So we do see kind of broad-based use of this product feature set. And, you know, from there we'll expand based on customer feedback. But we believe it's going to be quite general.

Thank you. The next question comes from Matt Bullock with B of A, followed by Dylan Becker with Will and Blair.

Great. Hi. Thanks for taking the question. 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.

Sure. So, you know, 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 a number of these arrangements are three- to five-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 sensor and adopt it. That would be the high level. I don't think it's fundamentally changed the discounting in 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.

Got it. And then one quick follow-up, if I could. Could you provide an update on, you know, how the conversations are generally trending with some of those more strategic accounts, you know, those accounts with, you know, 100,000-plus vehicles? Are those, you know, deals moving through the pipe, you know, as expected? What are you hearing from customers in general?

Sure. I'm happy to cover that one as well. So I think these customers are very interested in what we're doing. They are large, very complex operations. They often have many operating divisions. And so for them to either make a change or adopt a new technology, for some of these companies, they don't have digital technologies deployed across the entirety of their fleet. It's a lot of change management. So I would say it continues to progress in terms of how they're working in the funnel. But these are multi-year sales cycles when you talk about strategic deals of that scale.

Got it. Thank you. The next question comes from Dylan Becker with William Blair, followed by Mark Schapel with Loop Capital.

Great. Thanks, guys. Hey, Sanjay, Tom, Mike, everybody. Maybe, Sanjay, 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, kind of the strategic value of that solution as maybe customers think about optimizing kind of throughput and runtime of existing assets and ensuring that those are fully operational for maybe as long as possible.

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 or 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.

Okay, great. Thank you. And then maybe, Dom, for you, too, as we think about kind of the non-vehicle strength in the business as well, too, can you give us a sense of maybe the directional kind of attach where we sit today and maybe how you expect that to trend as well, too, as more of these larger enterprise customers tend to land kind of multi-product in nature? Thanks.

Yeah, it's been pretty consistent. It's kind of in the mid-teens in terms of, you know, overall ARR. We're continuing to grow and scale, you know, monitoring another and all these other kind of workflow applications. I think the usage continues to be much higher than the ARR mix. So more than 50% of our core customers and more than two-thirds of our large customers are using a non-vehicle-based application, and we're seeing that adoption pick up as we move release more and more of these new products. And so I think that that gives us a lot of excitement about the ability to kind of go more wall-to-wall in some of these customers with these non-vehicle assets to increase that overall ARR mix over time.

Great. Thank you both. Appreciate it. The next question comes from Mark Schapel with Loop Capital, followed by Alexey Gogolev with J.P. Morgan.

Hi, thank you for taking my question, Sanjeev. 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. You know, how far behind, for example, are they in your view? And also, too, do you see a different set of competitors over there?

Sure. So, you know, 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's, I think, good acceptance of video-based safety. They're very comfortable with connected cameras. And really what's different is perhaps, you know, 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 years in the market. And I think – I don't know, Dominic, if you want to add anything on Europe?

Yeah, I just – I think, you know, it's been a number of years of solid kind of investment focus and execution. Obviously, we talked about launching a few new products in Europe, the bridge striking alerting and the electronic brake monitoring. We've also been landing more and more lighthouse customers. You've heard us talk about, you know, companies like Vinci, Fortune 500 construction company, and a number of others. And so just a lot of kind of steady progress and investment there.

And I think the second half of your question was around competition. It is a different set of competitors there. They tend to be more regionally focused, and so we're showing up with a fairly mature technology platform that has a lot of functionality, and we're in the process of tweaking the product to meet the needs of each region. Thank you. Very helpful.

The next question comes from Alexey Gogolev. with JP Morgan, followed by Alex Sklar with Raymond James. Alex? Okay, let's go to Alex with Raymond James.

Great, thanks. Dominic, on the dollar-based net retention of the strong quarter at 115%, is that still?

Okay, I think we lost Alex there. Let's go with Derek Wood with TD Cowan. Derek?

Thanks. Hopefully this hasn't been asked, but just, you know, with the extra market uncertainty out there, I'm wondering if perhaps in times like this, this opens up a window to gain share from legacy vendors. So I'm just curious kind of what you're seeing out of the competitive landscape, and do you have new strategies to look to drive up, you know, win rates or competitive displacements?

I don't think it's terribly different than when there's more, you know, macro stability. Again, I think we're coming, as Sandra said, with a platform with a lot of kind of functionality, and often cases, you know, customers have not adopted any sort of digital technology around there. their operations and and you know we've got a a market leading product and so um i i don't think that's any different now versus you know other other periods of time i think just more broadly the the kind of prioritization for for customers you know with a lot of uncertainty around their near-term uh cost structure um can you know scrape timing risk on some deals sure uh don just to follow up to um i i know you guys have indicated that you expected to temper hiring

uh this year any any change in how to think about headcount growth uh plans and has that changed since the beginning of the year

No changes from the beginning of the year. I think just as a reminder, I think over the last couple of years, you know, we really didn't make, you know, coming out of COVID, we really were kind of behind on hiring, and we really used the last kind of couple of years as catch-up years. And so this year was planned to and continues to be planned to be more of a balanced year where, you know, productivity has been, you know, solid in Q1 and gives us the confidence to continue to, add sales capacity, but we're kind of on track with what we expected at the beginning of the year. Thank you.

Thanks. Let's go back to Alex. Let's try him again. See if his connection's back.

Great. Thank you. Can you all hear me?

Yeah.

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?

No, yeah, 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 and of their existing products across a broader set of assets, you know, whether it's geographies or, you know, different operating companies. And that's what we saw in Q1.

Okay, great. And then maybe for you, Sanjit, you called out accelerating results from the field services end market. You had some PR earlier this week on that end market as well. Can you just talk about your focus there? Any particular solutions that you're focused on that are more tailored to that end market versus some of your others?

Well, it continues to be an area of interest. So in field services, the operations are a little different than in transportation logistics. They have more site visits. They have more equipment. So areas like the asset tag or new products like the asset tag are helpful there in terms of filling out the portfolio. They're also now starting to adopt driver safety. Historically, it had been industries like long-haul transportation that had bought cameras. Most of the market, if you think about most of the commercial vehicles on the road, 80%, 90% of them don't have any kind of connected driver safety coaching program. our field services customers, they think of their teams more as technicians or workers as opposed to drivers, and they're starting to see that they could actually reduce risk with technologies like this. So I think it's really just this is a segment of the market that's kind of activating and adopting these new technologies. Great. Thank you both.

The next question comes from Junaid with Truists, followed by Alexei with JPMorgan.

Great. Thank you for taking my question. Sanjay, 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. Thank you.

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-cab 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. Great. Thank you.

Okay, our last question today comes from Alexei with KP Morgan.

Thank you, Mike. Sanjit, I had a question about this massive wind 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?

Sure. I would say there's really kind of two 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 example. 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've 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.

Thank you, Sanjay.

Great. This concludes the question and answer portion. Thank you all for attending our Q1 fiscal year 2026 earnings call. Before I let you go, I have a few short announcements. First, we'll be attending the BMO Virtual Software Conference on June 9th, the Mizuho Tech Conference in New York City on June 10th, and the FBN Virtual Software Conference on June 11th. We hope to see you at one of these events. Second, we are hosting our Investor Day on June 24th in San Diego, where we will provide additional insights into Samsara's trajectory and the overall state of physical operations. Please send an email to ir.samsara.com if you're interested in attending in person. For those who prefer to attend virtually, our international relations website will have a link to a live broadcast. That's it for today's meeting. If you have any follow-up questions, you can email us at ir.samsara.com. Bye, everyone.