Samsara Inc.

Good afternoon, and welcome to the Samsara's second quarter fiscal 2027 earnings call. I'm Marty Winnick, Director of Finance and Strategy at Samsara. Joining me today are Samsara's 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.samsara.com. The matters we'll discuss today include forward-looking statements. After 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, September 3rd, 2026, 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 will discuss our second quarter fiscal 2027 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 difference. Reconciliations of GAAP and 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 up the call for Q&A. With that, I'll hand it over to Sanjit.

Thanks, Marty, and thank you, everyone, for joining us today. Samsara delivered another quarter of durable and efficient growth. In Q2, we crossed $2.1 billion in ARR, growing 30% year over year, which is driven by $134 million in net new ARR. Our largest customers continue to drive our growth. Our $100,000 plus customers now represent $1.3 billion in ARR, growing 38% year over year. In Q2, we added 242 customers with $100,000 or more in ARR and 20 customers with $1 million or more in ARR. Both are quarterly records. Large customer wins in the quarter include API Group, a global provider of safety, security, and specialty services, Sonopar, the world's largest B2B distributor of electrical products, and one of the world's largest e-commerce companies. As our customer base grows, our data asset scales with it. This quarter, we surpassed 30 trillion data points collected annually on the Samsara platform, up more than 40% year over year. This data spans vehicles, Thank you for joining us. In June, we hosted BEYOND, our annual customer conference. It was our biggest BEYOND yet, with over 4,000 attendees from across physical operations. Over three days, leaders shared the challenges they're facing. They also shared how they plan to solve them with more visibility across their operations and AI to automate work. Their top priorities include safety, operational ROI, real-time visibility, and AI and agentic automation. Our platform, built on one of the world's largest operational data assets, is what helps us address our customers' hardest challenges. At Beyond, we launched our newest wave of products, including the Tracking Label, which is a single-use Bluetooth smart label powered by the Samsara network. It gives near real-time visibility into any shipment across any carrier. 360 Camera, the first camera system built for operated equipment, giving operators complete view around the vehicle. Waste Intelligence, and AI-powered solution that verifies service events and detects overfilled bins, ground intelligence, which continuously maps road defects across our data set, and our agents for safety, maintenance, and dispatch that automate multi-step task work like warranty recovery, coaching workflows, and back office dispatch. We're seeing good momentum from beyond, which is showing up in usage. Customer adoption of some of our latest AI features is up more than four times in the last two months. Samsara is built to run the world's largest and most complex physical operations. As these organizations digitize, we become their platform of choice. Our largest customers are driving our growth. ARR from our $100,000 plus customer cohort accelerated for the fourth straight quarter. Customers choose Samsara because our platform can digitize their vehicles, equipment, sites, and workers at the scale and reliability their operations demand. What often starts as a solution to one operational problem becomes a platform they standardize on. Each new product can deepen their ROI and widen the path to their next expansion. Our device footprint accelerates that expansion. With multiple products attached to a single hardware device, new products deploy faster with no downtime for asset replacement. Customers get quicker time to value and less installation friction. For example, a vehicle gateway powers routing and connected asset maintenance. Our AI dash cam and AI multicam power our new operational AI applications, including ground intelligence and waste intelligence. I'd like to share two expansions from the quarter that show how large customers deepened their partnership with Samsara over time. In Q2, we expanded our partnership with one of the largest cities in the U.S. They landed with us in Q3 last year, starting with vehicle gateways and AI dash cams for their fleet management division. This quarter, that expanded into a multi-department rollout connecting assets across the city. They're extending vehicle gateways and AI dash cams to every department, including police, fire, parks, public works, and transit. They cover a range of vehicles from police cars and fire trucks to construction equipment and snow plows. For their fire and sanitation fleets, they added AI multicam to reduce backside and sideswipe accidents in dense urban traffic. Connected Asset Maintenance replaces their existing system and consolidates maintenance management onto one platform. With ground intelligence, they now have coverage across 7,600 lane miles for pothole detection, pavement preservation, through mobilization, and 311 calls and claims. We are proud to partner with the city to make even more of an impact together. We also expanded our partnership with the leading heavy civil and general contracting company that's been in business for over 75 years. They are benefiting from many physical AI tailwinds, including data center site prep, power and energy systems expansion, and public infrastructure buildup. They have a complex operation and run $1 billion of equipment, including thousands of excavators, skid steers, cranes, and loaders. They were using vehicle gateways and came to us to evaluate AI dash cams for their fleet. The pilot delivered strong results with an 83% reduction in safety events. As we dug deeper into their operations, connected asset maintenance became the biggest ROI driver in the deal. The company spends $80 to $100 million per year on maintenance, but the data is fragmented across their ERP, OEM portals, spreadsheets, and employees. Maximizing maintenance ROI required bringing all their data onto one platform. To solve this, they expanded with AI dashcams. They also licensed powered asset gateways for the large machinery, and asset tags for the smaller assets like fueling tanks, containers, and excavator buckets. They added AI multicams for their vehicles and connected forms to digitize their paper workflows. Together, these give them one view of every asset they own so they can improve utilization and maintenance. As we build for the long term, we're investing in continuous innovation to meet our customers' changing needs, strengthen our platform, and extend our AI leadership. In addition to the new products at Beyond, we unveiled AI-powered features that make our customers' operations smarter and safer. This includes voice agents through the AI dash cam, which closes the gap between a manager or agent detecting a risk and the driver hearing about it. Agents can proactively alert drivers to geofence-based risks, like speed limit changes and towing zones, and managers can reach drivers instantly when conditions change. New AI multicam detections, including rear collision warning and vehicle and blind spot detection, These detections process camera feeds on the edge to alert workers to hazards in the moment before an incident happens. Shipment center, an AI-powered command center for shipments, customers can ask questions in plain language, like which deliveries are at risk from a storm, and get instant answers with recommended actions across their entire shipment network. In bird's-eye view, a configurable, top-down, 360-degree view of vehicle and its surroundings. This gives drivers full situational awareness during high-risk maneuvers like reversing and tight turns in crowded yards and job sites. Each of these features addresses a priority customers have been raising. We're excited to see the impact they will have with our customers as they start to adopt these in their operations. At Beyond, we also launched the Samsara Community, a global online hub that connects operators across the world of physical operations. More than 5,000 members have already joined. The SAMSTAR community gives our tens of thousands of customers in North America and Europe direct access to each other's expertise. This deepens engagement with our platform as customers become advocates who tell their peers about what's working. It also speeds up time to value. Customers pass along deployment and change management best practices to help others ramp faster and see ROI sooner. The community compounds our product feedback loop, giving us an always-on channel of customer input at scale. We're excited about the impact we're making for our customers as we cross $2 billion in ARR. We're now operating at a massive scale with more than 30 trillion data points, 340 million workflows digitized, and 105 billion miles driven over the last year. Our growing data asset is what powers our AI insights and drives the customer actions that deliver more ROI from our platform. I want to thank all 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 highlighted by accelerating growth and improved operating leverage demonstrated by strong performance across several key metrics including 28% year-over-year net new ARR growth in constant currency representing accelerated growth both sequentially and compared to Q2 last year as well as our second highest growth rate over the past 10 quarters. 30% total ARR growth Thank you for joining us. More than 20% of net new ACV coming from emerging products for the third consecutive quarter and achieving our fourth consecutive quarter of gap profitability. More broadly, our performance reflects the large still nascent opportunity for digital transformation across physical operations. Looking ahead, we're well positioned to deliver long-term shareholder value for several key reasons. First, we have a unique defensible data advantage. By instrumenting physical assets with IoT hardware, we've created a large, growing, proprietary data asset that's hard to replicate. Second, we leverage this data using AI and agents to surface operational insights and automate workflows across our platform. Third, we benefit from secular growth in physical AI. End markets such as construction, field services, energy and utilities are not only busy building out global infrastructure, They're increasingly using AI to manage greater scale and complexity. Fourth, we have a differentiated value prop and mission-critical workflows. Our products deliver fast, tangible ROI with quick payback periods. And lastly, we target the large, less discretionary operations budget. Our largest customers invest approximately 80% of their revenue on their operations, and we help them optimize the significant cost base, creating a large opportunity to drive customer impact and sustained long-term growth. Okay, now turning to our results. Q2 net new ARR was $134 million, an increase of 28% year-over-year, accelerating both sequentially and compared to Q2 last year. This also represented our second highest constant currency growth rate over the past 10 quarters. More broadly, net new ARR over the last 12 months was $485 million, growing 27% year-over-year in constant currency, Accelerating from 14% in Q2 last year Q2 ending ARR was $2.1 billion, an increase of 30% year-over-year, representing the same growth rate as the last two quarters at a larger scale And Q2 revenue was $508 million, an increase of 30% year-over-year, or 29% in constant currency, the same growth rate as last quarter at a larger scale Several factors drove our strong top-line performance in Q2 Thank you for joining us. ARR from 100K plus customers was $1.3 billion, increasing 38% year-over-year, resulting in the fourth consecutive quarter of sequential acceleration. 100K plus customers represent 63% of total ARR, up from 59% one year ago. Additionally, we ended Q2 with 210 $1 million plus ARR customers, a quarterly record increase of 20. ARR from $1 million plus customers surpassed $500 million, increasing more than 50% year-over-year for the third consecutive quarter. Second, our customers are increasingly using Samsara as a single unified operations platform across multiple applications. 96% of 100k plus ARR customers subscribed to two or more products, up from 95% in Q2 last year, and 72% subscribed to three or more products, up from 68% last year. In Q2, 9 of the top 10 net new ACV deals included 2 or more products, 8 included 3 or more, and 7 included 4 or more products. And this strong multi-product adoption helped us achieve our target dollar-based net retention rate of approximately 115% for core customers. And third, we demonstrated strong execution across several frontiers. For the third consecutive quarter, more than 20% of net new ACV came from emerging products. Eight of the top 10 net new ACV transactions included an emerging product, and more than 60 Q2 transactions included more than 100K in emerging product net new ACV. In terms of end markets, field services was our largest vertical in Q2, contributing its highest net new ACV mix in over two years. Transportation contributed the second highest net new ACV mix in the quarter, and year-over-year growth accelerated sequentially for the third consecutive quarter. and public sector contributed its second highest ever net new ACV mix with year-over-year growth accelerating sequentially for the second consecutive quarter. Driven by deals with a top five U.S. city, which included more than $2 million from emerging products such as AI multicam, connected asset maintenance and ground intelligence. MBTA, New England's largest transit provider and the state of Louisiana, all of which included four or more products. and in terms of international, 18% of net new ACV came from non-US geographies, tied for a quarterly record. Europe contributed its second highest ever net new ACV mix and had its fourth consecutive quarter of 50% plus net new ACV growth, driven by our largest ever mainland Europe deal with one of the world's largest e-commerce companies. and Mexico year-over-year net new ACV growth accelerated for the second consecutive quarter, resulting in its highest net new ACV mix in the last five quarters. In addition to driving strong top-line growth, we continue to deliver operating leverage across our business as we scale. Non-GAAP operating margin was 21% in Q2, up 6 percentage points year-over-year. Free cash flow margin was 13%, up 1 percentage point year-over-year, including the 16th consecutive quarter surpassing Rule of 40. And GAAP EPS was a positive 3 cents, representing our 4th consecutive quarter of GAAP profitability. Okay, now turning to Q3 and FY27 guidance based on FX rates as of August 2nd. Our guidance philosophy remains the same and is de-risked for potential downside scenarios. For Q3, we expect revenue to be between $514 and $516 million, representing 24% year-over-year growth or 23% to 24% growth in constant currency, non-GAAP operating margin to be 21%, non-GAAP EPS to be between $0.18 and $0.19, and we expect to be GAAP profitable for Q3. For full year FY27, we expect revenue to be between $2.043 and $2.047 billion, representing 26% year-over-year growth, non-GAAP operating margin to be 21%, non-GAAP EPS to be between 76 and 78 cents, and we also expect to be GAAP profitable for full year FY27. And please see the modeling notes in our shareholder letter, including one additional note on free cash flow. We now expect free cash flow margin to be approximately 100 basis points lower than FY26, primarily due to more IoT devices required to support our stronger growth outlook, proactively purchasing more inventory to create a buffer given the strong customer demand we're seeing, and elevated supply chain costs in the second half of the year. We believe operating margin is the best indicator of improved profitability and is the best forward indicator of of where free cash flow margin will be in a more normal supply chain environment as we've seen in the past. So to wrap up, in Q2, we delivered accelerating growth at scale while expanding operating leverage. Looking ahead, we believe we're well positioned to sustain durable and efficient growth because we're instrumenting physical assets with IoT hardware to generate a unique defensible data asset. We then apply AI and agents to that data to surface operational insights and automate workflows We're at the center of the AI transition from the digital to the physical world and tied to end markets benefiting from major infrastructure initiatives. And we deliver fast, tangible customer ROI with quick payback periods. 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 Marty to moderate Q&A.