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.