Samsara Inc.

Good afternoon and welcome to Samsara's second quarter fiscal 2026 earnings call. I'm Mike Chang, Samsara's Vice President of Corporate Development and Investor Relations. Joining me today are Samsara Chief Executive Officer and Co-Founder Sanjay 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.samisaro.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 forelooking statements that we make on this call are based on assumptions as of today, September 4th, 2025, and you 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 will discuss our second 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. We also report both actual and constant currency growth rates for certain metrics. On the call, we will only provide constant currency commentary when there is a material difference. Reconciliations of GAAP to non-GAAP financial measures and additional information on constant currency are provided in our press release and investor presentation. We'll make opening remarks, dive into highlights for the quarter, and then open the call for Q&A. With that, I'll hand over to Sanjay.

Thanks, Mike. And thank you, everyone, for joining us today. Samsara delivered another strong quarter of durable and efficient growth. We ended Q2 with $1.6 billion in ARR, growing 30% year-over-year. Our $100,000-plus ARR customers now contribute close to $1 billion of ARR, up 35% year-over-year, and now represent 59% of our total ARR. In Q2, we added 17 customers with more than $1 million in ARR, a quarterly record. Our $1 million-plus ARR customers crossed an important milestone in Q2. They now generate more than 20% of our ARR, or approximately $350 million. Our strategy to partner with the world's largest and most complex operations organizations is working and is fueling our growth at scale. In Q2, we partnered with many large enterprises, including Alaska Airlines, the fifth largest airline in the US, SRM Concrete, the largest ready-mix concrete provider in the US, and one of the largest Fortune 1000 rental equipment companies in North America. We're excited to work with these industry leaders and help them operate smarter. As we grow our customer base, we're also scaling our data asset. We reached another company milestone in Q2. We now process approximately 20 trillion data points annually on our platform. Our unique and proprietary data asset is not found on the internet. It pulls data from gateways, cameras, and sensors that we've deployed across our customers' vast operations with breadth across diverse asset types and markets and geographies. We're proud to partner with our customers to build the world's largest physical operations dataset, which provides us unique visibility into where and how customers run their operations. Combining this with AI, we're delivering actionable insights that solve their toughest challenges. In June, we hosted our biggest customer conference yet, Samsara Beyond. During the three-day event, thousands of leaders joined us to hear about how our newest innovations and to share their feedback and insights. We also learned about the challenges they're facing, including increased demand to build AI infrastructure, safety risks, capital expenditure costs, and employee churn. These conversations make our customers' top priorities clear. We're seeing a notable shift towards AI and automation as they modernize manual processes. They want a single, unified platform to manage their complex operations. And they want to extend risk management from vehicles into the field to protect their workers and to use digital tools to help with high employee turnover and labor shortages. Our customers are increasingly turning to AI to help them scale their output while running safer, more efficient, and more sustainable operations. During Beyond, we also hosted our Connected Operations Awards Ceremony. We celebrated 17 global customers who achieved an outsized impact with our platform. I'd like to share some of the highlights from a few of our winners. Maxim Crane, a leading crane rental company in the U.S., was our most innovative workforce winner. They saved $13 million in maintenance costs by shifting their maintenance program from reactive to proactive. They also saw a 94% reduction in harsh driving and an 87% reduction in speeding. Another winner was Mohawk Industries, the largest flooring manufacturer in the world. They won excellence in systems efficiency. They saved $7.75 million by using planned versus actual analysis to reduce their mileage by 4.2 million miles. They saved an additional $500,000 from rightsizing their fleet. They also saw safety gains, including a 54% reduction in speeding. We are proud to partner with our customers to make a real-world impact on their operations. Our connected operations platform is solving our customers' toughest challenges. As we scale to over 20,000 core customers, our flywheel of innovation is accelerating. We build products for our customers that deliver a clear and fast ROI. As our customers use these products, they contribute data to the platform. This growing data asset then allows us to build new products. This is fueling the expansion of our platform at an unprecedented rate, and I'm excited about the opportunity to deliver even more customer impact through our platform. At Beyond, we announced a record number of new products and features. These products help our customers by protecting their frontline workers, modernizing the frontline worker experience, improving asset maintenance, and optimizing asset utilization. Safety is a top priority for leaders. Driving is one of the 10 most dangerous jobs in the U.S., with fatal crashes up 49% in the past decade and insurance premiums up 40%. Leaders also want to modernize their frontline worker experience to improve productivity and are looking for new ways to improve asset maintenance and utilization as rising costs and high interest rates are creating pressure to reduce capital expenditures. To help our customers with these challenges, we launched new products including asset maintenance, which helps organizations monitor and manage the upkeep of their vehicles and equipment, commercial navigation, which is tailored to the unique constraints of large commercial vehicles, route planning, which creates and optimizes routes with fewer miles in vehicles, AI multicam, which gives drivers real-time 360-degree video coverage around any vehicle, and worker safety, which protects frontline workers wherever they work. It's never been a more exciting time partnering with our customers to improve their operations. As we build for the long term, we're investing in innovation to meet our customers' evolving needs, our open platform and partner ecosystem, and our leadership and culture. First, we announced many new features in addition to our new products at BEYOND. For our customers' frontline workers, we redesigned our driver app to be more intuitive and engaging with streaks and short training videos. We also built new AI-enhanced DVIRs to help workers improve compliance and accuracy. To help reduce risk, we built weather intelligence, which provides real-time, ground-level weather insights. All of these new features are broadly available to our customers, and we're looking forward to increasing our customer impact. Second, our open ecosystem and the work of our partners are central to our success. We've now expanded our partner ecosystem to over 350 integrations, and our largest customer on average are using six of them. This demonstrates the value of partnerships in helping customers unify their operations. We're continuously building on this by adding dozens of new partners, including Element, Rivian, Happy Robot, and Marsh. And we're also deepening our existing integrations to provide even greater value. Lastly, I'm happy to share that Gary Steele has joined our board of directors. Gary is a proven leader with over 30 years of leadership experience in the technology industry. His expertise in enterprise software and AI will be invaluable as we continue to drive multi-product adoption and deliver clear ROI for our customers. We're confident that his contributions will be a great asset, and we look forward to working with him. We're seeing great customer impact as we continue to scale. Our connected operations platform now sees approximately 20 trillion data points, 300 million digitized workflows, and 90 billion miles annually. With this data, we're driving actionable AI-powered insights to help our customers achieve even more ROI from our platform. Each year, we compound the impact we can make for our customers, and we're excited for the decades-long opportunity ahead. We want to thank all of the Samsarians, customers, partners, and investors for joining us on this journey. I'll now hand it over to Dominic to go over the financial highlights for the quarter.

Thank you, Sanjit. Q2 was another quarter of durable growth and improved profitability. The quarter was highlighted by strong performance across several key metrics, including another quarter of 30% plus year-over-year growth at a larger scale, 19% year-over-year net new ARR growth, which accelerated sequentially at a larger scale, 17 new $1 million plus ARR customers, which was a quarterly record, more than 20% of total ARR from $1 million-plus customers, and year-over-year ARR growth for this cohort accelerated sequentially at a larger scale, approximately $1 billion of ARR from 100k-plus ARR customers, an increase of 35% year-over-year and representing 59% of total ARR, and 8% of net new ACV from new products launched since last year. And while we experienced a few elongated sales cycles in Q1 following Liberation Day, all of the impacted larger transactions closed in Q2, which contributed to our strong growth, and we didn't experience further tariff-related impact in the quarter. Looking ahead, we believe we are well positioned to deliver durable growth and create long-term shareholder value for a few key reasons. First, we have a unique defensible data advantage. By instrumenting physical assets, we generate a large and growing proprietary data asset that cannot be replicated or sourced from the internet. Second, AI is accelerating our innovation and we are releasing new products and meaningful features at a faster pace, driving higher customer engagement and usage. Third, our business model scales with physical assets rather than headcount or knowledge workers and aligns us to end markets that are poised to benefit from major initiatives like the global AI infrastructure build-out. Fourth, our products have a differentiated value prop and mission-critical workflows that delivers fast and tangible ROI with quick payback periods, And lastly, we're targeting the large and less discretionary operations budget, which represents approximately 80% of our customers' revenue on average. And because we help them optimize this significant and durable cost base, we have a large opportunity to drive customer impact and long-term growth. Now taking a look at our Q2 results, Q2 ending ARR was $1.64 billion, an increase of 30% year-over-year. Within that, we added $105 million of net new ARR, an increase of 19% year-over-year, or accelerating sequential growth at a larger scale. And Q2 revenue was $391 million, growing 30% year-over-year, or 31% in constant currency. Several factors drove our strong top line performance in Q2. First, we focus on serving large enterprise customers to drive efficient growth at scale. In terms of large deals, we signed seven $1 million plus net new ACV transactions in Q2, our second highest quarter ever. This reflects the success of our investments to support larger customer opportunities. At the same time, larger deals have inherently longer and less predictable sales cycles, which means that their timing may introduce more variability into our quarterly results than in the past. In terms of large customers, we ended Q2 with approximately 1 billion of ARR from 100K plus ARR customers, an increase of 35% year over year, representing 59% of total ARR, up from 57% one year ago. We also ended Q2 with 147 $1 million plus ARR customers, including a quarterly record increase of 17. $1 million plus ARR customers contributed more than 20% of total ARR, and year-over-year growth from this cohort accelerated sequentially at a larger scale. Second, landing new customers remains a key driver of our growth strategy that fuels future expansion opportunities. In terms of new customers, we added our third highest number of net new core customers in Q2, surpassing more than 1,000 for the fourth time in the past five quarters. Nine of the top 10 new logos adopted two or more products, and eight of the top 10 adopted three or more products in their initial transactions. These new logos included two public sector customers, one with a state-level department and another with one of the largest counties in the U.S., a top five U.S. airline, one of the largest employee-owned electrical contractors, and the UK subsidiary of one of the largest global retailers, which adopted four products in its initial contract, video-based safety, vehicle telematics, connected workflows, and connected training. In terms of expansions, all 10 of the top 10 expansions in Q2 included at least two products, and five of the top 10 included three or more products. Additionally, 15 of our top 25 ARR customers expanded in Q2, and we achieved our target dollar-based net retention rate of approximately 115% for core customers. And third, we demonstrated strong execution across several frontier markets. In terms of international, 15% of net new ACV came from non-US geographies, the largest of which was Europe, which accelerated net new ACV growth sequentially to its highest level in the last four quarters. In terms of end markets, we saw momentum across construction, public sector, and manufacturing. Construction drove the highest net new ACV mix of all industries for the eighth consecutive quarter and delivered its highest net new ACV mix in the last six quarters. Public sector strength came from wins across several state departments, including Nebraska DOT, as well as large municipalities, including Newtown. the city of Nashville, and a leading passenger transit agency in Los Angeles. And manufacturing delivered its highest net new ACV mix ever, led by SRM Concrete, the largest U.S.-ready mixed concrete provider. Their initial purchase included video-based safety, vehicle telematics, equipment monitoring, connected workflows, and commercial navigation. In a pilot, they saw faster accidents response times with connected workflows, exonerated drivers and not-at-fault accidents, improved job site efficiency with real-time visibility, and improved customer experience through more on-time deliveries using commercial navigation. And in terms of emerging products, 8% of our net new ACV in Q2 came from our new products launched in the past year, led by asset tags, connected workflows, connected training, asset maintenance, AI multicam, and commercial navigation. This quarter, we signed our largest ever asset tags deal with Bonnie Plants, the largest U.S. supplier and producer of vegetable and herb plants. They deployed 15,000 asset tags to track their owned and leased cart fleet and reducing asset loss and theft while improving worker efficiency. In addition to driving strong top-line growth, we continue to deliver operating leverage across our business as we scale. Non-GAAP gross margin was 78% in Q2, up 1 percentage point year over year. Non-GAAP operating margin was 15%, up 9 percentage points from one year ago. And free cash flow margin was 11% in Q2, up 7 percentage points year over year. Okay, now turning to guidance, which is based on FX rates as of August 2nd. For Q3, we expect revenue to be between 398 and 400 million, representing 24% year-over-year growth or 23 to 24% growth in constant currency. Non-gap operating margin to be 15% and non-gap EPS to be between 11 and 12 cents. For full year FY26, we expect revenue to be between $1.574 and $1.578 billion, representing 26% year-over-year growth, non-GAAP operating margin to be 15%, and non-GAAP EPS to be between $0.45 and $0.47. And finally, please see the additional modeling notes in our shareholder letter. To wrap up, in Q2, we delivered high growth at scale while also delivering operating efficiency gains. Looking ahead, we believe Samsara is well-positioned to sustain durable and efficient growth because we generate a unique, defensible data asset that powers differentiated AI innovation and deeper customer engagement. We are aligned with secular growth in physical operations that is poised to benefit from major initiatives such as the global AI infrastructure build-out. And we deliver tangible ROI through mission-critical workflows and help customers achieve fast payback periods on their investments. We look forward to building on this momentum as we help our customers operate more safely, efficiently, and sustainably at a greater scale. And with that, I'll hand it over to Mike to moderate Q&A.

Thanks, Dominic. We will 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 Matt Hedberg with RBC.

Hey guys, thanks for taking the question. Maybe the first one is, Just in terms of the early customer conversations coming out of Beyond, when you stack rank some of the new product launches that are getting the most traction, where you've seen the fastest movement from interest to pilot or deployment, kind of walk through those a little bit and maybe help shape how we should think maybe for even the full year as you look at your guidance, that net new ACV growth from new products kind of trending. I have a quick follow-up.

Sure. I'll take that one. Alex, this is Sanjit. So, Beyond was great. I think a lot of enthusiasm and excitement from the customer base, especially for the new products and features we launched. You know, I would say a number of them are hitting and resonating well. We launched routing and commercial navigation. That's relevant in a number of industries. It improves safety and efficiency for their operations. We also saw a lot of interest around maintenance and then continued interest in things like asset tags that we launched the previous year but are gaining momentum. With all of these products, it takes some time for these customers to figure out how they're going to adopt them on the platform and the change management for the frontline. These folks often have tens of thousands of frontline workers, so putting a new app in front of them is a big change. That being said, I think we're seeing really positive momentum, trials and pilots in a number of accounts across different industries. We'll come back to you and report on that continued revenue growth. But as Dominic highlighted, 8% of the new ACV was coming from these other applications. So we're really pleased with the initial momentum.

Perfect. And then maybe just as a follow-up, Dom, the net new ARR 105, accelerating growth, strong large deal and logo momentum. Seems like you really kind of hit it out of the park this quarter with sales execution. Maybe just help us understand how this performance kind of You know, this bounce back after Q1, how much of that was macro kind of figuring itself out? How much of that was new product? How much of that was linearity from some of the deals that slipped? Give us a sense for how to think about both that and kind of what looks like a pretty conservative guide for the second half.

Yeah, maybe I'll just bifurcate the quarter into kind of the two components, kind of the macro tariff and then just the strength in the quarter. I think, as I called out in the prepared remarks as we discussed last quarter, there were a few larger deals, I'd say, kind of totaling mid-single-digit millions of net new ACV that we originally had forecasted would come in to Q1, but ultimately pushed to Q2 after the Liberation Day tariff announcements. All of those larger impacted deals closed in Q2. We didn't experience any further changes impact in the quarter. And so really, if you look at the net new ARR growth, really for the first half of the year, combining both kind of this Q1 and Q2, it was in the low double digits. I'd say beyond that, Q2 was really strong. And I think the big call out is just the large customer momentum now doing almost a billion dollars of ARR from our 100K plus ARR customers up 35% year over year. And then really we're starting to see more traction out of our million dollar plus ARR customers landing a quarterly record 17. And that cohort is now driving more than 20% of overall ARR. And so that definitely also contributed to the strength in the quarter.

Perfect. Thank you guys. Congrats.

The next question comes from Matt Hedberg with RBC, followed by Chris with Morgan Stanley.

Great. Thanks for taking my questions, guys. Congrats from me as well. Really strong results. I'm curious, building on the new product success, your traction in AI is notable. And in a market where investors are concerned about AI disrupting software, It feels like you guys are well-positioned to actually benefit from that. And it seemed like that was a real focus of Beyond. I guess my question is, as you think broader about the product portfolio and the build-out, do we need to think about new ways to monetize and price and package AI-based functionality? Does any of that evolve as you continue to roll out functionality leveraging the existing data on the platform? Yeah.

Yeah, absolutely. So I think we have a lot of exciting things going on with AI. One is it's enhancing the core product experience, which is really beneficial for our customers as they think about their safety and efficiency. So we're able to surface deeper insights, help them really make sense of all of this data. And then, as you mentioned, as a byproduct of all this data flowing into the platform, these 20 trillion data points, we can identify new sources of value. So, for example, one of the features we launched at Beyond was was this ability to go see at a moment's notice the current weather status anywhere on the roads in the U.S. in really like up-to-the-minute sort of views. That's not something that was possible until we had the scale of data and then AI to process it, understand these conditions, help provide it in a privacy-preserving sort of way. So I think over time, we will be able to introduce net new products that are enabled by AI, but I would also expect that our current products get better and better because of what we're doing with AI. That's great.

And then, Dom, you mentioned the largest ever asset tag deal with Bonnie Plants. Great to hear the success. I think we all were excited coming out of that initial product launch. I'm wondering on a deal like that, is there any way to think about how that adds to customer ACV and really how that customer thought about the ROI? You mentioned some of the key reasons in terms of asset inventory, but could you walk us through maybe just some rough idea of sort of an economics of a deal like that? Thanks, guys. Congrats.

Yeah. Yeah, and that's an interesting deal because the asset tags was the biggest component of it. But because of the asset tag opportunity, it allowed us to also land with some of our core products, telematics and safety. So that really was a big expansion of that. And I think, you know, in use cases around asset tags, we're really replacing nothing. So they were losing these owned and leased carts. And so now being able to track them, they're going to be able to save a lot of money in asset loss and theft. And so a lot of the customers are coming from no technology. They're really just kind of starting out on their digital transformation journey. And so being able to deploy technologies to these use cases really can drive a lot of ROI. Thank you.

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

Hey, Sanjay. Hey, Dominic. This is Chris on for Keith Weiss here. I want to ask about the large customer momentum that you've got going on here. Really encouraging to see. You mentioned some of the investments you've been making there to support those larger deals. So can you remind us kind of what those were and how those have progressed versus your expectations and kind of how you look on a go forward basis of streamlining some more of those bigger deals?

I'll take that one. So we've been making investments to support these large customers across the board. On the sales side, we have a dedicated team focused on these strategic accounts. But more broadly, we have teams that are set up to help them with implementation and change management, adoption of these products across the board, their sustained sort of use and kind of value unlock. And then on the software side and the product side, we've been making a making sure the integrations and the APIs are really robust, set up to operate at scale, technologies like FirstNet, which are relevant for a lot of these large enterprises and more. So I would say that it's been a company-wide effort to support the large enterprise. It's great to see us breaking records on that front. The $17 million-plus customers was a quarterly record. So I think we're going to continue to invest in that area. And the other exciting thing is these are very large, complex operations where there's a lot of opportunity to unlock more value. So these core products are doing great. But as we get to know these customers, we're starting to do workshops with them and find additional areas of value that we can really help.

Got it. That's super helpful. Thanks, Sanjay. And then I want to also follow up on the European success, another quarter of accelerating that new ACV growth there. Are there any specific unlocks or learnings that you've learned gathered over the past few months and years as you've penetrated that market that you can bring to the broader international rollout.

I think it actually kind of dovetails off of what Sangeet said around the large customers. It's just been sustained investment in some of these regions where there's more commercial vehicles in Europe than there are in North America. But making steady investments around go-to-market sales reps, sales engineers, the marketing resources, landing lighthouse customers that can you know, be referenceable to other accounts and then making all of the kind of R&D investments required around the platform, the security, the scalability. We've called out in previous quarters that there are product specific features that are required, like in Europe, bridge strikes is really critical. And so making those investments has allowed us to have some continued success there. Awesome. Thanks so much, guys.

The next question comes from Michael Turin with Wells Fargo, followed by Jim Fish with Piper Sandler.

Hey, Greg, can you hear me okay? Sorry, I just clicked over. Yeah, we can hear you. Okay, excellent. I wanted to spend a few moments on a couple of just key points that you're flagging in the prepared remarks. You mentioned the AI infrastructure built out specifically in the letter. Would be curious to just hear you speak more to where your customers fit within those end markets and how you're prioritizing that opportunity from a go-to-market perspective. And also curious to hear any commentary around what you're seeing from public sector. We can appreciate the diversification, but those two areas I think are particularly in focus right now. Thanks very much.

Sure, I'll take that one. You know, AI infrastructure build-out is a really interesting theme. If you think about who our customers are, they're the world of physical operations. These are folks like the construction companies, the field services companies, like the electricians, for example, that are involved in these projects, as well as the electric utilities. So almost all of them are trying to find ways to keep up with this demand and operate smarter. These are very compressed schedules. They demand a lot of efficiency, and they also have to be safe while they're doing all this work. So those would be the end markets that we're seeing that kind of traction in. Specifically, construction had the highest contribution to our net new ACV mix for the eighth quarter in a row. So it's really this kind of continued push that we're seeing from these industries. And then somewhat related to that in the public sector. This is an area where there are a lot of assets. If you think about all of our towns and cities that we live in, they require infrastructure to operate, everything from waste management and school buses to the folks running inspections on the roads. And so what we're seeing there is that this end market is waking up to how much money can be saved for their citizens by more efficient operations. And I think we've built the right feature set, and we've also done the right security work to meet the standards that many of these folks have in the, in the state and local opportunities.

That's all super interesting. Thanks very much.

The next question comes from Jim fish with Piper Sandler followed by Matt Bullock with B of a.

Hey guys, I wanted to follow up on one of the prior questions around the big quarter for million dollar plus ARR deals. Is there a way to think about how much of that 20% is being, I'll say more of a mid market that is consolidated on top of Samsara as kind of the base versus say, you know, very upper end of the market global 2000 and sort of why now we're starting to see that million dollar cohort really coming on and Dom for you, how you're navigating these larger deals in the context of your projections, given the timing uncertainty. Thanks guys.

Yeah, definitely there are examples of some smaller customers that have really expanded and gone more wall-to-wall across their operations on SAMSAR, but primarily the majority of the $147 million plus AR customers that we have today are really large enterprises with complex physical operations, and we're really just scratching the surface in terms of getting started with them, often in our core products, but as we've really picked up the pace of our innovation over the last couple of years. I called out a number of deals where customers are landing with three, four, five products out of the gate. And so we're finding more of these use cases with the large customers. And again, that was a big driver of the growth in the quarter.

Okay. Next question comes from Matt Bullock with B of A, followed by Kirk Maturin with Evercore.

Fantastic. Thank you. Great to hear that there was no tariff impact during the quarter, but Sanjit, would love to hear about how some of those conversations have evolved exiting April as things settled down, customers figured out some of those asset procurement strategies. I guess, you know, asked a different way. Do we think we're out of the woods here and customers have done kind of the groundwork to continue to stay nimble in an evolving tariff environment?

Yeah, Matt, I think you sort of put your finger on it, which was that back in April, it was a little bit of a shock to the system, especially for our customers. These are people operating in very asset-heavy industries, and so they procure a lot of equipment, and they had to really take a moment to figure out what their strategies would look like. At this point, there's still uncertainty on the tariff rates themselves, but tariffs appear to be here to stay. What I'm hearing from customers is they've adapted to the environment. They've made their plans. They are trying to find ways to be more efficient with the assets they have, So we're seeing them trying to essentially stretch asset lifespans. They do that through smarter asset maintenance programs, which is what we're offering on our platform now. They're also trying to optimize the efficiency and the utilization of these assets, which, again, we can provide with our asset products. And so I think we're well set up to help solve these real problems for them. But while there's still uncertainty on the horizon of the specific tariff rates, I think the customers have really adapted to this new environment.

Super helpful, Sanjeev. And then a quick one for Dominic, if I could. Certainly a larger net new ARR beat than I think we were all expecting, particularly in the enterprise segment. Can you maybe just help us thinking about sales productivity trends within that sales organization versus, I know you're obviously building out and adding additional resources in that market specifically, but maybe help us parse through what you think drove that larger beat.

Yeah, I'd say the growth in this quarter, Q1, the first half of this year has really been more balanced than maybe it has been in previous years where a couple of years ago, we were really adding a lot more capacity. And before that coming out of COVID, more of the growth was driven out of productivity with lower capacity. I think going into FY26, we've really found a nice balance of continuing to add more sales capacity, but seeing really good growth. productivity being driven by a lot of the efforts of the R&D organization building a lot of the new products that are allowing us to solve even more use cases for customers and allowing our sales reps to be even more productive. We feel good about the balance and it's going to allow us to continue to make capacity investments going into the second half of the year. Fantastic. Thank you.

The next question comes from Kirk Matern with Evercore followed by Alex Sklar with Raymond James.

Yeah, thanks very much. Sanjit, I was just wondering, you guys obviously have a much more expansive product portfolio today than you did a couple of years ago. You know, from a go-to-market perspective, how do you make sure that each of these newer products, each of which, you know, have a big opportunity in front of them, get the right type of care and feeding from the sales organization? Are you doing anything in terms of SPIVs, Suncern products, or specialized sales reps, just kind of wondering how you're balancing the fact that you guys just have a much more broad-based product portfolio today than a couple of years ago. Thanks.

Yeah, Kirk, I think you put your finger on a very practical problem for us, which is we do have a lot to offer our customers. We highlight the value of the platform first and foremost. Most of our customers are not looking to solve just one problem, but they often have many different operational challenges they want technology for. So we do have generalist sales reps that are familiar with the portfolio. They have sales engineers and specialists they can call in for additional help if they need to talk about a specific integration or specific feature on there. And then over time, we do experiment with things like SPFs, with specialists and other kind of tactics, I guess, to help with that. But it's an area that we're continuing to focus on. We want to make sure all of these products are successful. And most importantly, that we get the customers the assistance that they're really looking for.

Okay. And you highlighted a number of your integration partners this quarter. I was just kind of curious, having those integrations, I think you mentioned your biggest customers have six integrations or thereabouts. Is that sort of a check the box for your big partner or your big customers? Meaning if you didn't have those, that would make the conversation more difficult or is it a real sort of differentiator when you're going up against other competitors in the market?

Thanks. I would say much more of the latter. We're the first company to offer this sort of widespread integration ability. And the quality of the integration matters, too. It's one thing to sign a partnership. It's another thing for the data to flow really well, for us to have bidirectional data feeds, things like that. And it's an area that our customers are getting a lot of value from. They have been waiting for a company to come in and integrate all of this or really unify all of this data in one place. And that's everything from OEM telematics to fuel cards to insurance integrations, payroll providers. There's a lot you can do with this data, a lot of value for the customer. So I think it's a huge differentiator for us. And again, the quality of these integrations really matters. These customers have often been burned in the past by vendors that have said they'll do an integration, but it doesn't really work for them. When we're able to show these working out of the box and the quality is excellent, they get excited and they want to do more with us.

Thank you. The next question comes from Alex Sklar with Brayman James, followed by Dan Jester with BMO.

Hi, this is Jessica on for Alex. Can you hear me?

Yes.

Alright, yeah, just a one quick question from us. Has there been anything structural about international opportunity and differences in competitive environment that you think could be gating TensorFlow from achieving growth at levels similar to what you've been seeing domestically last few years? It's been really impressive. And also, have you been seeing anything about competitors being more aggressive on pricing as they're trying to be winning deals from you? How is this all interacting?

I'll take that one. I would say the set of competitors has been pretty consistent for the last several years for us. There are several of them. Many of them are point solutions or regional players, but we're seeing the same names come up over and over. The way we differentiate, again, is the platform approach, the way we engage with our customers, the amount of value we're able to unlock across our operations. Then to the second part of your question around pricing, that is often where some of these competitors go is they'll just discount very heavily in order to try to compete for these deals. We, again, try to really demonstrate that we can do more for these customers, help them find more value. Around 80% of their revenue is invested in their operations. So this is a huge area of expense for them. And so if we can find additional areas of savings, things like that, they're not focused on price. They're focused on what can I do with all this technology?

Got it. Thank you.

The next question comes from Dan Jester with BMO, followed by Dylan Becker with William Blair.

Great. Good afternoon, everyone. Thanks for taking my question. A couple of weeks ago, you announced a pre-delivery installation program to get your hardware into the trucks before customers buy them. And I think in the press release, it said that you expect this to be the standard for the industry over time. Maybe can you just expand on the value of the pre-installation and what kind of maybe competitive moats that provides If you can get the hardware in before the truck even gets shipped to the customer. Thank you.

Yeah, absolutely, Dan. So I think maybe just for a little bit of customer context, if you're a larger enterprise and you've got 5,000 or 10,000 trucks, in a given year, you're swapping out 1,000 of them, which means that sometimes in a given month or even a week, you've got dozens of vehicles getting changed out. For us to be able to deliver, have those vehicles be delivered with Samstar on board, it really helps eliminate a huge operational headache. And again, those vehicles may be delivered to different cities all over a country. So it's an area where we're able to streamline our customers' operations. It provides a much better experience for them. It makes sure those vehicles are ready to go on day one. And it's something that customers have been asking for and we're excited to be able to offer because of our scale and our presence in the market. So very glad to get that program off the ground. We're continuing to expand that program, partnering with even more OEMs. So hopefully more good news to come on that front.

Great. Thank you. And then maybe just to revisit the sort of strength in the performance in sort of larger customers from a different angle. I know it's less of a focus, but maybe you can talk about what you're seeing with some of your smaller and mid-sized customers that maybe do have maybe a little bit more macro impact. Are you seeing any change in their behavior or has it been pretty consistent? Thank you so much.

Yeah. Yes, Dominic. Yeah, it was very consistent. And while we had a very strong large customer, $100K plus, $1 million plus ARR order, we also saw a lot of strength in commercial mid-market. So if you just look at the numbers, the ARR mix from 100K plus customers was 58% last quarter and went up to 59%. So it's definitely growing faster than our overall base, but it's not like it stepped up exponentially, which implies that the mid-market and kind of S&B part of our business also had strong growth in the quarter.

Great. Thank you so much.

The next question comes from Dylan Becker with William Blair, followed by Derek Wood with TD Cowan.

Gentlemen, appreciate it. Maybe Dom, starting with you, if we look at the outperformance on the revenue line, kind of a notable step up here, I was wondering if you could kind of help us parse through that a little bit more, whether that was kind of conservatism, given some of the uncertainty we saw last year, any linearity of kind of ramp and go lives, obviously some large customer momentum, but help us parse through kind of the revenue outperformance, if you would, please.

Yeah. Thanks for asking that. Yeah. I'd say overall, even going into the quarter. And as I look into the back of here, like no, no change to our guidance philosophy, you know, we're, we're still gonna, you know, try to ensure that we're setting revenue guidance with a lot of confidence, you know, that accounts for, you know, various downside scenarios. If we don't see those scenarios ultimately play out, it generally results in us being able to, to outperform the guidance for Q2 specifically, there was even more outperformance than normal. Obviously we, we got some, um, revenue benefit from the stronger bookings linearity with some of those Q1 deals slipping in and closing in early in Q2. We don't have that same dynamic into Q3. And so that started the quarter off strong in terms of bookings linearity. And, you know, you saw that outperformance flow through to the beat in the quarter.

Very helpful. Thank you. And then maybe for you or Sanjit as well too, obviously the emphasis coming out of Beyond was on kind of the accelerated cadence of new product innovation and Wonder how maybe at the advent of AI, kind of the cost of building and introducing new products and capabilities is helping contribute to kind of some of this enterprise and million plus strength that we're seeing, kind of the receptivity and willingness for them to try more products, but also your ability and appetite to have more irons in the fire over time as well. Thank you.

Yeah, Dylan, I think the interest in AI, it's certainly strong in the enterprise. We do see it in the mid-market as well. We collect a tremendous amount of data on the platform. There's a lot of value in that data, but you really do need AI to help you sift through it all, find insights, and really help change behavior. And that's ultimately where the value comes from. That's how they get the safety and efficiency gains. I think we're getting a lot of new ideas from our enterprise customers because they have large complex operations. They're really experts in their various industries. And so they often lead us to really innovative new solutions and we kind of co-develop them together. But for us, we're excited about what AI is able to do and the capabilities that's just changing every year. whether it's large language models or some of these vector databases and other technologies coming to market. So we're, we're generally excited about being able to find new sources of value for all kinds of customers, especially in the enterprise, but down in the mid market and SMB as well.

Great. Thank you. The next question comes from Derek with TD Cowan followed by Junaid with Truist.

Great. Thanks guys. Congrats on a great quarter. It's been over a year since the release of asset tags and, Just curious, how is the product done versus your expectations? And did we think of this as kind of a long tail growth dynamic or is this something that could really start to contribute to larger deals and move the needle more on overall growth as we look out over the next 12 to 18 months?

Yeah, we're really pleased with the performance of Asset Tags. I think it's just notable that it's a product that's addressing a really large problem where technology, frankly, doesn't exist today. So we've got these customers, and they've got all kinds of assets and machinery out there, and they can't locate them. They go lost. They don't know where they are. And so this is really the first time that this kind of tech technology using, you know, Bluetooth technology has really been available for these customers. And so the product's been out for a year. We've had a lot of, you know, good conversations and trials with customers. And then, you know, starting to result in some pretty big deals where, you know, we called out Bonnie Plants as our largest asset tag deal ever, 15,000 asset tags in the quarter. And so we had another really large one, I think, in Q4 a couple of quarters ago. And so we do expect this will continue to pick up as customers are more aware that this technology exists.

And I would just add, it takes some time for them to realize that this is now possible. Many of them spend tens of millions of dollars replacing these lost or stolen assets. They spend a lot of time searching for these assets in their operations. And they've done it that way for, you know, 25, 50, 100 years. So they're starting to realize technology can help, but it's an education process for us.

Interesting. Thanks. And I guess, Dom, I mean, of the 8% of net new ACV from new products, is asset tags the biggest component of that? And Is there maybe a clear number two within that mix that you'd highlight?

It was actually pretty spread out across all of the products that I mentioned. So Acid Tags definitely had a great quarter, but Commercial Nav, Workflows, Maintenance, Navigation, all contributed to the 8%. Great.

Okay, thanks. The next question comes from Junaid with Truists, followed by Matt with Goldman Sachs. Junaid? Okay, let's move on to Matt with Goldman Sachs.

Matt?

Junaid? Yeah. Hey, sorry. Can you hear me?

Hey, guys.

Hey, can you hear me okay?

Yeah, let's do Junaid first, and then we'll go to Matt. Yeah.

Great. Thanks, guys. You know, it seems like you're continuing to add sales capacity and feel pretty confident about the significant opportunity going forward. But I just wanted to ask you, how are you looking at the growth versus profitability framework going forward?

Yeah, I mean, both of them are, you know, important to us. We really focus on kind of balance, both growth and profitability. I think this was the consecutive quarter we've been north of a rule of 40. And then obviously, even within that, we were able to uh, accelerate our net new era year over year growth, uh, at a, at a larger scale and, and continue to grow really quickly as a result of the, the large customer momentum and the strong kind of land and expand quarter. And, and then the contribution of the, um, the emerging products in new frontiers. And so, you know, within the construct of, of wanting to kind of balance both growth and profitability, you know, being over rule of 40, we feel good about that. And then, and then wanting to continue to try to, uh, make the investments to grow as fast as we can beyond that.

Great. Thanks. And I'm just on the gross margin, uh, You know, that continues to take up. I know you've talked about that, you know, historically that most of the margin improvement is going to be below that line. But could you just call out some of the reasons for, you know, the strength there and, you know, if you can continue to sustain that?

Yeah, it comes really across our entire cog stack. And, you know, I think we're up kind of one percentage point year over year. So not a lot of leverage. And I think, you know, going from here, we feel good with where, you know, gross margins are and expect much more of the leverage to come from, you know, from the other OpEx line items. In terms of supply chain and inventory efficiencies, cloud and cellular efficiencies, more leverage out of customer support, all of those kind of line items within COGS are getting a little bit more efficient year over year, and we feel good with those results. Great. Thank you.

The next question comes from Matt with Goldman Sachs, followed by Andrew with BNP.

Hey, guys, this is Matt on for cash. Sanjit, maybe going back to the emerging product, net new ACV strength in the quarter, you flagged contributions from a few of the announcements from Beyond 25, asset maintenance, AI multicam, commercial nav. These products have only been in market for a couple of months. I'm curious if you expected this level of momentum this early into the launch and how this may inform your view on emerging product net new ACV contributions looking ahead. Thanks.

Yeah, I would say, Matt, a number of these customers that purchased in the quarter, they had been design partners with us. They're going much bigger with it. So it's exciting to see that they're ready to go and that the products are working for them at scale. Um, I do think every product has a natural revenue ramp, um, that, that, that takes the number of quarters and we plan to continue enhancing these products over that, uh, over the next couple of quarters too. It's not just that this is the release and that's it. Um, so we're going to keep investing. Uh, we're going to, you know, keep getting more trials in action, but we are very pleased with that initial response we're seeing from the customer base.

Awesome. Thanks a lot. Great. The next question comes from Andrew at BNP followed by Mark with Loop Capital.

Thanks for fitting me in. I guess looking at your net new customers that you added over 100K, looking how it trended relative to last year, while still good, I noticed it slowed down slightly. Just wondering, is this a function of the fact that you're landing larger customers or am I missing something?

Yeah, I would say, you know, overall, it was a really strong large customer quarter. The 100K plus AR customers are now doing, you know, about a billion dollars of ARR up 35% year over year. They're contributing 59% of the overall ARR, which is up from 57% last year. So this is clearly our fastest growing cohort. I think it's important to consider the ARR, the growth rates, the ARR mix, not just the customer counts. But beyond that, we obviously added a quarterly record $17 million, $1 million plus ARR customers, and that's becoming more meaningful to our results as well.

Thanks. And then one on the R&D, I'm just wondering if, in terms of this quarter, was would you expect this to continue to grow at the consistent rate? Or is there something like in terms of efficiency that we've achieved on that, that makes it a driver of operating leverage going forward?

I think R&D is going to continue to be one of our big areas of investment. Obviously, you're really focused on adding AI throughout the platform and into all of the products. And then the pace of innovation and products that we've announced over the last couple of years has really picked up, which requires a lot of R&D investment. So I don't expect it to... materially decrease in terms of the overall leverage, but I also don't expect it to be an area where we're going to start to see the percentage of revenue go in the opposite direction as well. Thanks.

The next question comes from Mark with Loop Capital, followed by Alexi with JP Morgan.

Hi, thank you for taking my question. Sanjeev, the number of products the company sells has increased meaningfully during the past year or so. which can often complicate the selling process. Could you just discuss a little bit about how you've adapted your selling process to accommodate all the new products?

Sure. You know, I would say, again, we focus on the value of the platform. We really want to understand our customers' operations. Typically speaking, they'll have vehicles, and so safety and telematics will be lead products. And those are products that I think the market's generally familiar with. But along the way, they'll discover that, hey, there's an opportunity to improve training for a lot of these frontline workers, or maybe there's a maintenance opportunity. So really, we try to, again, show our customers the entire platform. We do a lot of demos where they're able to see the breadth of what we offer. And many times, the customers will self-select and say, hey, I actually have a lot of construction equipment in my business, or We're really trying to think through how we do commercial navigation because we have an issue with hazmat or bridge strikes and all these kind of real world problems. So I view it as rather than focusing on selling products, really understand the customer's operations, their environment, and then work backward from that. And I think our sales team does a great job of really kind of engaging at that level.

Great. Thanks. And then Dominic, could you just discuss the hiring that took place in the quarter and just remind us of how you're thinking about hiring for the balance of the year?

Yeah, I think what we've disclosed is that after two years of really elevated hiring growth that we were going into this year with still adding more headcount, but at a lower rate than what we had to do over the last two years to kind of catch up, we're on track to do that. So kind of the plan that we set out at the beginning of the year, we're on track with that and expect to continue to add more headcount into the back half of the year as well.

Thank you. Great. Our last question today comes from Alexi with JP Morgan.

Hi, this is Ella Smith on for Alexi Gogolev. Thank you so much for taking our questions. So first, I was hoping to ask about landing new customers as that is a focus for you. Are you primarily landing these new customers through telematics and video-based safety, or is it becoming more common to land customers via a non-fleet solution?

Yeah, it's definitely becoming more common. I think we called out the number of new logos that added two or more or three more products in the prepared remarks, the majority of the largest new logos. And then we give a number of examples of the products that customers are adopting. So that is becoming increasingly more common. Customers often will land with video-based safety and vehicle telematics, but increasingly we're seeing equipment monitoring and a number of the newer emerging products that we've announced over the last couple of years land in the initial transaction.

Got it. Thank you, Dominic. And for my follow-up, you're experiencing strength in the construction segment for some time now, despite the macro data for that industry being somewhat weak. I was curious if you could shed some light on your conversation with your construction customers.

Yeah, I'll take that one. I think it's important to understand the construction industry and the context they're coming from. These are customers where they have very asset and labor intensive operations. For them to get deep visibility into which assets are being used and how much, and if they're operating safely, if they can find labor efficiencies, it makes a really big difference in their operations. This is also an industry that's relatively early in the digitization journey. Most of that yellow iron equipment that you see at job sites isn't well-tracked and doesn't have real-time telematics or video safety on it. Most of the small tools that you'll see at a construction site don't have any kind of tracking on them. So there's a lot of greenfield opportunity. It's a market that is starting to really wake up to the value of technology, and it's complex. So they have to digest it over time, but we're excited by what we're seeing.

Great.

Thank you, Sanjit. Okay, so this includes the question and answer portion. Thank you all for attending our Q2 fiscal year 2026 earnings call. Before I let you go, I have a few short announcements. We'll be attending the Goldman Sachs Communicopia Conference in San Francisco on September 8th, the Wolf Technology Conference in San Francisco on September 10th, the Piper Sandler Growth Frontiers Conference in Nashville on September 10th, and the Evercore Bus Tour on September 17th. We hope to see you at one of these events. That's it for today's meeting. If you have any follow-up questions, you can email us at ir.samstar.com. Bye, everyone.