Executive Summary / Key Takeaways

• Samsara is pioneering the digital transformation of physical operations, a vast and underpenetrated market, leveraging its Connected Operations Platform and unique data asset to deliver tangible ROI for customers.
• The company continues to demonstrate durable growth at scale, highlighted by 31% year-over-year ARR growth to $1.54 billion in Q1 FY26 and strong expansion within large enterprise customers adopting multiple products.
• Samsara's differentiated AI-powered technology, built on trillions of operational data points, provides a competitive moat, enabling superior insights in safety, efficiency, and maintenance, driving customer value and supporting margin expansion.
• Despite macroeconomic uncertainty and potential tariff impacts causing some deal timing risk, strong pipeline generation and consistent win rates signal robust underlying demand for Samsara's solutions.
• Management's guidance for FY26 projects continued growth and operating leverage, underpinned by investments in go-to-market, R&D, international expansion, and emerging products like Asset Tags and Connected Workflows.

The Unseen Economy: Digitizing the Physical World

Samsara Inc. is at the forefront of a fundamental shift in how the world's most complex physical operations function. From the trucks that deliver goods to the construction sites that build infrastructure and the utilities that power cities, these industries represent a massive, asset-heavy, and labor-intensive segment of the global economy. Historically underserved by technology, these operations spend an estimated 60% to 80% of their revenue simply keeping things running. Samsara's mission, born out of its founding in 2015, is to bring the power of data and cloud connectivity to this unseen economy, transforming how these businesses operate by increasing safety, efficiency, and sustainability.

The company's core offering is its Connected Operations Platform, an open, integrated system that consolidates data from a diverse array of IoT devices, connected assets, and third-party systems. This platform moves beyond simple tracking to provide actionable insights through a cloud dashboard, mobile apps, custom alerts, and workflows. This integrated approach, which bundles hardware (IoT devices) and software (cloud platform, applications, support) into subscription agreements, is foundational to Samsara's strategy and its ability to become a system of record for its customers.

The Engine of Insight: Samsara's Differentiated Technology

At the heart of Samsara's value proposition lies its differentiated technology, particularly its massive operational data asset and the AI capabilities built upon it. The platform collects data from millions of connected assets, processing over 14 trillion data points and 70 billion miles driven annually as of FY25, with API calls exceeding 120 billion. This scale and breadth of real-world operational data provide a unique training ground for Samsara's AI models.

This data asset powers AI-driven insights that deliver tangible, quantifiable benefits for customers. In safety, AI detects risky behaviors like distracted driving and provides coaching based on patterns, leading to significant reductions in safety events and mobile usage, and potentially saving millions in insurance costs and payouts (commercial accidents involving large trucks exceed 500,000 annually in the U.S.). For maintenance, AI analyzes real-time diagnostics and over 1 billion fault codes annually to predict issues, optimize maintenance schedules, and extend asset lifespan, helping customers reduce unplanned maintenance and save on repair and replacement costs. The platform also enables efficiency gains through route optimization, reduced idling, and improved asset utilization. According to IDC, Samsara customers realize an estimated $2 million in average annual savings, equating to over 8x ROI.

Samsara continues to invest heavily in R&D to expand its technological lead. Recent innovations include the Asset Tag, an industrial-grade Bluetooth tag leveraging the existing Samsara network density for tracking smaller assets, and new worker experience products like Connected Workflows and Connected Training, which digitize manual processes and enable remote learning. The introduction of Samsara Intelligence, an expanded suite of AI offerings including Samsara Assistant and Intelligent Experiences, aims to make AI more accessible and actionable for frontline workers and back-office teams, further enhancing decision-making and operational performance. These technological advancements not only strengthen Samsara's competitive moat but also open up new revenue streams and drive deeper penetration within the customer base, contributing to gross margin expansion, particularly from software-only SKUs like Asset Tags.

Navigating the Competitive Terrain

The market for connected operations solutions is dynamic, featuring a mix of established players and more specialized providers. Samsara competes with companies like Trimble (TRMB), Oracle (ORCL), and Verizon (VZ), each approaching the market with different strengths. Trimble often emphasizes hardware-software integration and precise positioning, while Oracle leverages its broad enterprise cloud ecosystem, and Verizon capitalizes on its network infrastructure.

Samsara differentiates itself through its integrated platform approach, designed specifically for the complexities of physical operations. While competitors may offer point solutions, Samsara aims to be the single system of record, enabling customers to manage diverse assets and workflows from a unified dashboard. This platform strategy, coupled with its deep operational data asset and AI capabilities, provides a competitive edge, particularly in winning large enterprise deals that require comprehensive solutions. Samsara's focus on delivering clear and fast ROI also helps it stand out, especially against legacy providers or less specialized offerings. Although some competitors may have advantages in specific areas like network speed (Verizon) or overall enterprise scale (Oracle), Samsara's agility in developing AI-driven applications tailored to operational needs allows it to capture market share in emerging segments. Consolidation among some competitors is noted, but Samsara views its platform strength as a robust position in this evolving landscape.

Financial Performance and Operational Momentum

Samsara has demonstrated consistent financial performance, marked by strong revenue and ARR growth. In Q1 FY26, the company reported revenue of $366.9 million, a 31% increase year-over-year. This growth is primarily fueled by expanding its customer base and increasing adoption of its multi-product platform by existing customers. Annual Recurring Revenue (ARR) reached $1.54 billion in Q1 FY26, also growing 31% year-over-year adjusted for constant currency.

Operational execution remains strong, particularly in attracting and growing relationships with large enterprise customers. The company ended Q1 FY26 with 2,638 customers contributing over $100,000 in ARR, a 35% increase year-over-year. Multi-product adoption is a key driver of expansion, with 95% of these large customers subscribing to two or more products and 66% using three or more. This focus on expansion contributes to a healthy dollar-based net retention rate, consistently around 115%. Samsara is also seeing momentum in international markets, which contributed 18% of net new ACV in Q1 FY26, and in non-transportation verticals like construction, field services, and the public sector, which are increasingly adopting the platform.

Financially, Samsara is making progress towards profitability. Gross margin improved to 77% in Q1 FY26, up from 76% in the prior year period, driven by operational efficiencies. While operating expenses increased in absolute dollars due to investments in R&D, sales, and marketing headcount to support growth, they decreased as a percentage of revenue, reflecting operating leverage. The company reported a net loss of $22.1 million in Q1 FY26, an improvement from a $56.3 million net loss in the prior year.

Samsara also continues to generate positive cash flow from operations, reporting $52.6 million in Q1 FY26,

contributing to a healthy cash and investments balance of over $1 billion as of May 3, 2025, providing ample liquidity for future investments and operations.

Outlook and Strategic Trajectory

Looking ahead, Samsara's management remains confident in its ability to deliver durable and efficient growth, albeit with an acknowledgment of potential macroeconomic headwinds. The company provided guidance for Q2 FY26, expecting revenue between $371 million and $373 million, representing 24% year-over-year growth. For the full fiscal year 2026, Samsara anticipates revenue between $1.547 billion and $1.555 billion, reflecting 24% to 25% year-over-year growth adjusted for constant currency.

Management's guidance philosophy incorporates potential downside scenarios, such as elongated sales cycles experienced in Q1 FY26 due to customers prioritizing spending on tariff-impacted assets. However, strong underlying demand, record pipeline generation, and consistent win rates support the positive outlook. The company expects continued operating leverage, guiding for a non-GAAP operating margin of approximately 13% for FY26, a significant improvement from prior years. This focus on efficiency, coupled with sustained investment in go-to-market capacity, R&D, and international expansion, is central to Samsara's strategy to capture the vast market opportunity. The company's substantial remaining performance obligations (RPO) of $2.76 billion as of May 3, 2025, with over $1.3 billion expected to be recognized in the next 12 months, provides a strong foundation for future revenue growth.

Risks and Considerations

Despite its strong momentum, Samsara faces several pertinent risks. Macroeconomic uncertainty, including inflation, interest rate fluctuations, and potential impacts from evolving trade policies and tariffs, could affect customer spending levels and sales cycles. The company's dependence on a limited number of suppliers and joint design manufacturers for its IoT devices, particularly those with a significant presence in China and Taiwan, exposes it to supply chain disruptions and increased costs. Competition in the market, including from established players and potential new entrants, could intensify, potentially impacting pricing or market share gains. While Samsara's platform approach is a differentiator, encouraging widespread adoption and managing organizational change within large, complex customer environments remains an ongoing challenge. Furthermore, as the company expands internationally, it faces risks related to foreign currency fluctuations and compliance with diverse regulatory environments, such as the Pillar Two global minimum tax rules.

Conclusion

Samsara is executing effectively on its mission to digitize the world of physical operations, a market characterized by its immense size and low technological penetration. The company's Connected Operations Platform, powered by a unique and rapidly growing operational data asset and sophisticated AI capabilities, provides a compelling value proposition centered on driving measurable improvements in safety, efficiency, and sustainability for its customers. This technological differentiation, coupled with a focused go-to-market strategy targeting large enterprises and a commitment to multi-product expansion, is fueling durable growth at scale.

While macroeconomic uncertainty and competitive pressures present ongoing challenges, Samsara's strong financial performance, improving operating leverage, robust pipeline, and clear strategic roadmap position it favorably. The company's ability to consistently deliver tangible ROI for customers, even in challenging environments, underscores the resilience of its business model. For investors, Samsara represents an opportunity to participate in the digital transformation of a foundational segment of the global economy, driven by technological leadership and a significant runway for future expansion. Continued execution on its product roadmap, particularly in AI and emerging applications, and successful navigation of supply chain and macroeconomic risks will be key determinants of its long-term success.