Executive Summary / Key Takeaways

• AI-Powered Platform Driving Growth: Samsara's Connected Operations Platform, fueled by a rapidly expanding proprietary data asset (20 trillion data points annually), leverages AI to deliver quantifiable safety, efficiency, and sustainability benefits, resulting in an average of $2 million in annual savings and over 8x ROI per customer.
• Strong Enterprise Adoption and Multi-Product Expansion: The company demonstrates robust growth in large enterprise customers, with $100,000+ ARR customers contributing nearly $1 billion and 59% of total ARR, and a record 17 new $1 million+ ARR customers in Q2 FY26. Multi-product adoption is high, with 95% of large customers using two or more products.
• Impressive Financial Performance and Margin Expansion: Samsara reported strong Q2 FY26 results, with revenue of $391.5 million (up 30% year-over-year) and ARR of $1.64 billion (up 30% year-over-year). Non-GAAP gross margin expanded to 78% and non-GAAP operating margin surged to 15%, reflecting significant operational leverage.
• Strategic Innovation and Market Leadership: Continuous product innovation, including new AI offerings like Samsara Intelligence and strategic OEM partnerships, solidifies its competitive moat and addresses a massive, under-digitized market.
• Positive Outlook Despite Macro Headwinds: Management raised full-year FY26 revenue guidance to $1.574-$1.578 billion (26% year-over-year growth) and projects a 15% non-GAAP operating margin, signaling confidence in sustained growth and profitability, even with potential macroeconomic uncertainties.

The Digital Transformation of Physical Operations

Samsara Inc. ($IOT), established in 2015, has rapidly emerged as a pivotal force in the digital transformation of physical operations across the global economy. The company's mission is to enhance the safety, efficiency, and sustainability of the world's most complex operations by connecting people, devices, and systems through its innovative Connected Operations Platform. This platform serves as a central nervous system for industries ranging from transportation and construction to utilities and field services, which collectively represent a substantial portion of global GDP.

The market for physical operations remains significantly under-digitized, presenting a vast greenfield opportunity for Samsara. Less than half of North American commercial vehicles currently utilize telematics, and only about 10% employ safety products. This low penetration underscores the immense runway for growth as industries increasingly recognize the tangible benefits of real-time data and AI-powered insights. Samsara's strategic approach involves not only acquiring new customers in this expansive market but also deepening its relationships with existing clients through multi-product adoption and continuous innovation.

Technological Edge: Data, AI, and an Expanding Ecosystem

At the heart of Samsara's competitive advantage lies its proprietary Connected Operations Platform, a sophisticated blend of hardware, software, and cloud services. This open platform ingests, aggregates, and enriches data from Samsara's IoT devices—including wireless gateways, cameras, and sensors—as well as a growing ecosystem of connected assets and third-party systems. This creates a unique and defensible data asset that is not readily available elsewhere.

The scale of this data asset is remarkable, with Samsara processing approximately 20 trillion data points annually, representing over 50% year-over-year growth. This massive influx of proprietary data, combined with advanced AI capabilities, allows Samsara to deliver actionable insights that directly address critical customer challenges. For instance, AI-enabled video and alerts provide comprehensive safety monitoring for collision risk, traffic violations, harsh driving, driver fatigue, speeding, and distracted driving events. Customers like Maxim Crane have reported a 94% reduction in harsh driving and an 87% reduction in speeding, while a large U.S. retail propane company achieved a 75% reduction in safety events and a 71% reduction in mobile usage in a pilot program.

Samsara's commitment to innovation is evident in its rapid product development cycle. The company recently launched Samsara Intelligence, an expanded suite of AI offerings available in beta. This includes Samsara Assistant, an interactive generative AI tool providing instant answers to operational questions, and Intelligent Experiences, which embeds AI recommendations and actions directly into the platform. These tools empower frontline workers with visual, training, and coaching intelligence, such as identifying safety hazards from photos or creating custom training modules from policy documents. New products introduced in Q2 FY26, such as asset maintenance, commercial navigation, route planning, AI multicam, and worker safety, further extend the platform's capabilities.

The company's "innovation flywheel" is accelerating: products deliver clear ROI, customers contribute data, and this growing data asset fuels the development of new offerings. This is particularly impactful in areas like asset maintenance, where Samsara's AI-powered solutions leverage millions of assets and 80 billion miles of annual data to provide insights into fault code severity and common repairs. Sterling Crane, a customer, reduced unplanned maintenance from 34% to 20%, saving $500,000 annually in labor and over $3 million in equipment costs.

Samsara's ecosystem strategy, with over 350 integrations, is another key differentiator. These integrations, including OEM telematics, fuel cards, and insurance providers, unify disparate data sources into a "single pane of glass" for customers, a capability many have long sought. Recent OEM partnerships with Hyundai Translead, Stellantis (STLA), and Rivian (RIVN) aim to streamline data collection and enable pre-delivery installation of Samsara's solutions, making deployment seamless for customers.

Competitive Landscape and Strategic Positioning

Samsara operates in a competitive market that includes established telecommunications giants like Verizon Communications (VZ) and AT&T (T), specialized industrial IoT providers such as Trimble (TRMB), and broader enterprise software companies like Oracle (ORCL) and Cisco (CSCO) with IoT integrations. While these competitors offer various telematics and IoT solutions, Samsara differentiates itself through its integrated platform approach, deep AI capabilities, and focus on delivering quantifiable ROI for physical operations.

Samsara's platform is designed for greater efficiency in data aggregation and analytics compared to Verizon's more network-centric offerings. Its AI-driven insights and integrated user experience provide a stronger competitive edge against AT&T's often more hardware-dependent solutions. Against Trimble, which specializes in hardware-software integration for specific industries, Samsara's software agility and comprehensive cloud-based ecosystem offer a broader view of operations. While Oracle and Cisco provide extensive enterprise solutions, Samsara's specialized IoT platform offers more intuitive interfaces and faster adoption for real-time operational needs.

Competitors often resort to heavy discounting, but Samsara's strategy emphasizes demonstrating the significant value and ROI its platform delivers. The company's focus on less discretionary operations budgets, which can represent approximately 80% of a customer's revenue, allows it to highlight substantial savings opportunities beyond just price. High switching costs, driven by the deep integration of Samsara's hardware and software into client operations, further insulate it from competition.

In international markets, where competitors tend to be more regionally focused, Samsara is adapting its mature technology platform with region-specific features like Low Bridge Strikes and Electronic Brake Performance Monitoring System (EBPMS) for Europe, and Engine Immobilizer 2.0 for Mexico. This tailored approach, combined with sustained investment in go-to-market teams and customer success, is driving accelerated growth in these less-penetrated regions.

Financial Performance and Operational Momentum

Samsara has consistently demonstrated robust financial performance, reflecting the successful execution of its growth strategy. For the second quarter of fiscal year 2026, the company reported revenue of $391.5 million, marking a 30% increase year-over-year (31% in constant currency). Annual Recurring Revenue (ARR) reached $1.64 billion, also growing 30% year-over-year. This growth is largely fueled by an expanding customer base and increased adoption of additional applications by existing clients.

The company's focus on large enterprise customers is yielding significant results. In Q2 FY26, Samsara added a record 17 new customers with over $1 million in ARR, bringing this cohort to contribute more than 20% of total ARR, approximately $350 million. Customers with over $100,000 in ARR now contribute close to $1 billion of ARR, representing 59% of the total, up 35% year-over-year. This momentum is supported by high multi-product adoption, with 95% of $100,000+ ARR customers using two or more products, and 66% using three or more.

Samsara is also making significant strides in profitability. The non-GAAP gross margin expanded to 78% in Q2 FY26, a one percentage point increase year-over-year, driven by operational efficiencies in connected device costs and direct labor. More impressively, the non-GAAP operating margin surged to 15% in Q2 FY26, a nine percentage point improvement from the prior year. The free cash flow margin also saw substantial improvement, reaching 11% in Q2 FY26, up seven percentage points year-over-year. This demonstrates Samsara's ability to achieve "durable growth and improved profitability" at scale.

Liquidity remains strong, with $1.088 billion in cash, cash equivalents, and short-term and long-term investments as of August 2, 2025. The company maintains a healthy balance sheet with no material debt, providing a solid foundation for future growth and strategic initiatives. These resources are deemed sufficient to cover working capital and capital expenditure requirements for at least the next 12 months.

Outlook and Growth Trajectory

Samsara's management has provided a confident outlook for the remainder of fiscal year 2026, reflecting the company's strong performance and strategic positioning. For Q3 FY26, revenue is projected to be between $398 million and $400 million, representing 24% year-over-year growth (23-24% in constant currency). The non-GAAP operating margin is expected to be 15%, with non-GAAP EPS between $0.11 and $0.12.

For the full fiscal year 2026, Samsara raised its revenue guidance to a range of $1.574 billion to $1.578 billion, implying 26% year-over-year growth. The non-GAAP operating margin is targeted at 15%, and non-GAAP EPS is expected to be between $0.45 and $0.47. This guidance incorporates a consistent philosophy of setting targets with confidence, accounting for potential downside scenarios.

The company's growth is expected to be driven by continued investments in research and development, sales and marketing, and headcount expansion, particularly in go-to-market functions. The strong pipeline generation and accelerating innovation, especially in AI-powered solutions, are anticipated to sustain customer demand and multi-product adoption. International expansion, with tailored product features and growing market awareness, is also a key growth vector.

Risks and Challenges

Despite the compelling growth story, Samsara faces several risks. Macroeconomic conditions, including inflationary pressures, foreign currency fluctuations, and interest rate changes, could negatively impact business growth. Geopolitical tensions and tariff policies, while customers have adapted, introduce ongoing uncertainty and can lead to elongated sales cycles for large deals, which are inherently less predictable.

Competition remains intense, with point solutions and regional players often resorting to heavy discounting. Samsara's ability to continuously demonstrate superior value and ROI is crucial to counter these pricing pressures. Furthermore, as an IoT company, Samsara faces inherent cybersecurity risks associated with data collection, necessitating continuous investment in security measures. While the company has made significant strides in profitability, managing stock-based compensation (SBC) expenses, which totaled $86.3 million in Q2 FY26, remains a factor impacting GAAP profitability.

Conclusion

Samsara Inc. stands at the forefront of a profound digital transformation in physical operations, a massive and historically underserved market. The company's unique AI-powered Connected Operations Platform, built on a rapidly expanding proprietary data asset, delivers tangible and quantifiable ROI for its customers, driving significant improvements in safety, efficiency, and sustainability. This technological leadership, coupled with a robust "land and expand" strategy focused on large enterprise customers and multi-product adoption, underpins its durable growth trajectory.

With strong financial performance in Q2 FY26, marked by impressive revenue growth, expanding margins, and a confident outlook for the full fiscal year, Samsara is demonstrating its ability to scale efficiently while maintaining a clear competitive advantage. While macroeconomic uncertainties and competitive pressures persist, the company's continuous innovation in AI, strategic OEM partnerships, and targeted international expansion position it to capitalize on the vast opportunities ahead, making it a compelling investment in the evolving landscape of industrial IoT.