Samsara Stock

[Presentation]

Good afternoon. Welcome to Samsara's Second Quarter Fiscal 2027 Earnings Call. I'm Marty Winick, 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. Actual results may differ materially from those contained in the forward-looking statements and are subject to risks and uncertainties described more fully in our SEC filings. Any forward-looking statements that we make on this call are based on assumptions as of today, September 3, 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 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 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 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. Sonepar, 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, powered non-powered equipment, job sites and frontline workers. It covers a wide range of industries, geographies and customer sizes. Behind that number is the scale of our customers. More than 105 billion miles driven and 340 million workflows digitized over the last year. This is proprietary time series data captured by sensors operating in the physical world. It can't be replicated or found on the Internet. Each year of operating history compounds its value, improving our AI models and widening our moat.

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 3 days, leaders shared the challenges they're facing. They also shared how they plan to solve them with more visibility across our 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 the 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, an 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 multistep 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 4x in the last 2 months. Samsara has 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 is 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 2 expansions from the quarter that show how large customers deepen 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, 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 1 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 a 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 buildout. 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 million 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 1 platform. To solve this, they expanded with AI Dash Cams. 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 1 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 dashcam 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 and 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. And 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 their 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 Samsara 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 are now operating at a massive scale, with more than 30 trillion data points, 340 million workloads 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, which was the same growth rate as the last 2 quarters at a larger scale. 242 $100,000-plus ARR customers added a quarterly record, resulting in 38% year-over-year ARR growth, the fourth consecutive quarter of sequential acceleration at a larger scale. 20 $1 million-plus ARR customers added, also a quarterly record, resulting in 50% plus year-over-year ARR growth for the third consecutive quarter. More than 20% of net new ACV coming from emerging products for the third consecutive quarter and achieving our fourth consecutive quarter of GAAP 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 this significant cost base, creating a large opportunity to drive customer impact and sustain long-term growth.

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 2 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. First, large customer momentum is driving higher growth at scale. In terms of large deals, we signed 9 $1 million-plus net new ACV transactions in Q2, our third highest quarter ever. This reflects the success of our R&D and go-to-market investments to support these larger customer opportunities. In terms of large customers, we ended Q2 with 3,605 $100,000-plus ARR customers, including a quarterly record increase of 242. ARR from $100,000 plus customers was $1.3 billion, increasing 38% year-over-year, resulting in the fourth consecutive quarter of sequential acceleration. $100,000 plus customers represent 63% of total ARR, up from 59% 1 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 $100,000-plus ARR customers subscribed to 2 or more products, up from 95% in Q2 last year and 72% subscribed to 3 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 multiproduct 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. 8 of the top 10 net new ACV transactions included an emerging product and more than 60 Q2 transactions included more than $100,000 and 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 2 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 5 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 4 or more products. And in terms of international, 18% of net new ACV came from non-U.S. 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 5 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 $0.03, representing our fourth consecutive quarter of GAAP profitability.

Now turning to Q3 and FY '27 guidance based on FX rates as of August 2. Our guidance philosophy remains the same and is derisked for potential downside scenarios. For Q3, we expect revenue to be between $514 million 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 FY '27, we expect revenue to be between $2.043 billion and $2.047 billion, representing 26% year-over-year growth, non-GAAP operating margin to be 21%, non-GAAP EPS to be between $0.76 and $0.78 and we also expect to be GAAP profitable for full year FY '27.

And please see the modeling notes in our shareholder letter, including 1 additional note on free cash flow. We now expect free cash flow margin to be approximately 100 basis points lower than FY '26, 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 cost 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 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 driving more customer value. 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.

[Operator Instructions] The first question today comes from Dylan Becker at William Blair, followed by Michael Turrin with Wells Fargo.

Maybe one for Sanjit and one for Dom. Sanjit, starting with you, it's incredibly impressive how you guys have been able to maintain the level of success. And obviously, the pace of innovation is abundantly clear. Beyond earlier in the year. But if you were to kind of distill it down as to what's enabling you to sustain and not only sustain, really accelerate the momentum from a revenue, net new ARR perspective across the portfolio at an increasingly greater scale, what would maybe kind of be some of those 4 pillars in your mind?

Well, Dylan, thanks for noticing. We're really proud of the innovation and what we launched at Beyond. If I step back and think about why we're seeing this acceleration and growth, I would really point to our customers in the market. We're seeing, especially these large enterprises who have very vast, large complex physical operations look to digitally transform. They want information about all their assets. They want to make their teams safer and more efficient and they want to do it at scale. And they do have a lot of complexity in our platform is designed for that. So I think it's really strong product market fit. As we continue to innovate, bring new technologies to market, new ideas like connected asset maintenance and AI agents and 360 cameras and so on. It all fits within that broader digital transformation story. We're seeing with these large enterprises.

That's great. And maybe kind of as a parallel to that, Dom. I appreciate the color, on the near-term kind of free cash flow implications and some of the supply chain dynamics there, too. But if we kind of think about it as the accelerating momentum requiring maybe a little bit more installation and data capture from some of your components as well, too. How do you guys think about those near-term free cash flow implications attributable to the accelerating growth that you're seeing as well?

Yes, sure. So I think the dynamics around free cash are really driven by 3 factors. First is, we're just growing faster than we expected. Growth is accelerating, and that requires more of these IoT devices to support that growth. And because -- and we pay for these devices upfront, but the revenue that we get from them lags, it gets recognized ratably over the customer contract. The second is that we're planning to prebuy more inventory when possible because we're seeing such strong customer demand. We also view that as a competitive advantage. And then lastly, supply chain costs obviously continue to increase. I think if we take a step back, we feel really comfortable with all of this because we're really well capitalized. The long-term unit economics of these investments are still really good even at temporarily elevated prices.

As Sanjit mentioned in the prepared remarks, increasingly, we're able to monetize the data collected from these devices many times over. So a vehicle gateway cannot be monetized with telematics, with connected asset maintenance, with routing. These AI Dash Cameras cannot only be monetized with the video-based safety SKU, but now with these operational intelligence SKUs as well. And then obviously, we expect this to be temporary. We saw a similar supply chain dynamic. Post-COVID, where free cash flow started to lag behind operating margins for a period of time before ultimately reconverging and we expect that, that's going to happen again here.

The next question comes from Michael Turrin at Wells Fargo, followed by Alex Zukin with Wolfe Research.

Really impressive job with the Q2 results. So I guess I just want to start with, we were out at Beyond. Feedback was strong, but just if you could kind of help us parse where the product interest, if there were certain verticals or announcements that you'd highlight that were more top of mind. And just how much, if any, of that played into just the strength you saw in terms of net new ARR in the quarter.

So Michael, I would say the new products are performing really well. In aggregate, they were north of 20% of the new bookings in the quarter. And so we are seeing these customers adopt for more products in many cases. So that's been great. In terms of the product mix itself and which ones are standing out, no single one of those new products contributed more than 50% of those bookings. So it's pretty spread evenly across. Different industries have different areas of interest. In my prepared remarks, I talked about how waste management vehicles, fire trucks and other large vehicles benefit tremendously from the AI Multicam, we have other customers that are much more focused on tracking their shipments. So the Tracking Label is a good fit for them. So it really starts to vary industry by industry and even customer by customer. But in aggregate, it really was kind of strong showing across these new products.

And then just as a small follow-up, if I may, Dom. Does any of what you saw in Q2 impact, how you're thinking about seasonality or what we'd expect relative to prior seasonal trends for the rest of the year?

No. Yes, nothing stood out seasonality wise in Q2. I would say that Q2 revenue outperformance was driven by really strong bookings and slightly better linearity than what we've seen in previous quarters as I think about the guidance that we provided for the rest of the year. We're expecting more kind of normalized bookings linearity in those quarters in the way that, that results in revenue.

The next question comes from Alex Zukin at Wolfe followed by Matt Hedberg at RBC.

I guess maybe just a little bit of color on the AI Multicam product, Sanjit. It sounds like based on our conversations, both at your conference and in the channel that the product is kind of flying off the shelves right now. So is that -- are you kind of starting to see almost like a refresh cycle take place that creates another upsell opportunity? Does that also lead into the kind of cash flow implications of buying a more -- buying more supply than you previously needed. Anything to kind of read out from there?

Yes. I think if -- first of all, AI Multicam is doing very well. I think this is really the first time that customers at scale can get that kind of 360-degree view around their vehicles and understand risk like behind them and on the sides. We're also using it to create some of this new functionality like our road intelligence SKU where we can see road conditions and so on. So I don't think of it so much as a refresh cycle. It's really additive where people are saying, "Hey, there's even more we can do that goes beyond just the cab and the driver." There's a ton of operational intelligence that we can gather using these cameras as sensors. And so that's a new opportunity we're seeing, but it's additive. It doesn't seem to replace or kind of refresh any of the older products.

Excellent. And then, Dom, for you, from the free cash flow impact perspective, again, marginally, is it much more about the demand upswing that you're seeing or the supply chain dynamics? And specifically also, if you can talk about any emerging gross margin implications, maybe not necessarily this quarter, but down the line that you can see developing.

Yes. I mean, I think it's like definitely impacted by the fact that we're just growing faster than we expected, accelerating growth. And so as you book those deals, you need more inventory, more hardware and devices to support those deals. And because we're seeing such strong customer demand and because the supply chain environment is very dynamic, we're going to try to pre-buy inventory and just build up a buffer to make sure that we can meet all of the customer demand. And then in addition to all of that, the supply chain is more dynamic and there are underlying components that go into these devices where the cost and the shipping costs associated with that are all increasing.

So all of that is kind of weighing again. I think on the gross margin side, fortunately, the gross margin impact will happen over time because that cost gets amortized into COGS. So you don't see it upfront in the same way that you do with free cash flow, which ultimately gives us some time to try to find offsets. So can we drive higher revenue per device as we talked about a few times on this call monetizing data collected off of one device several times with multiple SKUs. Can we move more of the mix shift to the higher-margin products? Can we continue to find cost optimizations to offset this in terms of like cloud and sell, and so I'd say we have a lot of levers that we can ultimately pull over time with gross margins, and we feel good about being able to manage that over time.

The next question comes from Matt Hedberg at RBC followed by Lucas at Morgan Stanley.

Great. I'll offer my congrats as well. Yes, the new product innovation has certainly been standing out to us coming out of Beyond. And something I think you said on the call was interesting. I think you said you've seen a 4x growth in AI feature adoption in just 2 months. And that's a pretty amazing statistic. I guess can you give us a sense for maybe which features are driving that? And I know it's still early, but how should we think about that translating that usage into incremental ACV?

Sure. So it's been really fun to spend time with our customers and understand how are they putting AI to work in terms of task automation in their operations. A couple of the interesting use cases for AI agents are related to things like safety. We can make voice calls now to drivers at scale if there's certain weather conditions emerging or maybe they're drowsy on the road, things that our customers couldn't do, maybe they didn't have headcount or time or availability. Similarly, these agents can help with things like warranty claims. There's a lot of maintenance dollars that are sort of left untouched because no one had time to get to some of the paperwork.

So we're seeing a variety of use cases. It's still early, but already over 1,000 customers have really engaged on this. And what's fun is to be able to build together with them. So I think we've put the building blocks in place, the kind of platform features. And now we're going to really co-innovate with them to find more use cases for them to automate some of this task work.

That's great. And then, Dom, public sector really it seemed like it was a balance quarter, but it seems like pubic sector was particularly strong. I think it was maybe your second highest net new ACV mix maybe ever. I guess -- I mean we can all probably see what's driving that just as the U.S. government and broader public sectors tries to become more digitally native. But how are you kind of thinking about that deal cycle progressing as we get into Q3? Obviously, it's the federal year-end. Any sort of thought on how you kind of think about that dynamic for 3Q?

Yes. We don't have the same dynamic that other software companies have with the federal government having a 3Q year-end. Most of our public sector or state and local municipalities. And so it's a little bit more consistent throughout the year. But obviously, we've been making a number of investments. We think this is a really -- public sector is a big opportunity for us, and it's been driving a lot of our growth. We've made a number of go-to-market investments with a vertical-specific team there. And then a lot on the R&D side as well. So things like ground intelligence, the operational AI SKU that comes off of the cameras, the large top 5 U.S. city that we called out in the quarter, and the first quarter selling it landed with that as part of their deal. So the R&D investments are also helping us drive a lot of success there.

Next question comes from Lucas at Morgan Stanley followed by Matt Martino at Goldman Sachs.

This is Lucas [indiscernible] for Adam Wood. Congrats on a great quarter. You guys have seen a lot of strength internationally. Could you just double click on what's driving that recent strength? And then as you build share in what's a pretty fragmented market, is there a point where you expect growth to continue and flect higher as the brand and installed base reach greater scale?

Yes, I'm happy to take that one. We have been really proud of the performance of our international teams. I think in Europe, we're seeing really strong product market fit. They have some different sort of compliance requirements around Tachographs. So we've done a good job kind of building for that. They often have like low bridge strikes to be practical issues. So I think that is an example of how continued investment has resulted in a pretty high net new ACV mix coming from those regions.

Same thing down in Mexico. We've invested heavily in security. That's a very key use case for them, panic buttons, immobilizers and so on. So I think a lot of this does come down to having really strong product market fit. And then increasing brand awareness with some large reference customers. So in Europe, we work with Petit Forestier, Fraikin, these are some of the largest fleets in Europe. In Mexico, we work with Grupo Trayecto. They're one of the largest transportation companies, so I do think that our brand reputation is spreading as we become a partner to these large complex operations.

Really helpful. And then one more, if I may. Could you just touch on how the volatility in energy prices are changing discussions you're having with larger customers? And is that an uncertainty driving more attach with the new offerings? Or is it mainly within the core?

I think volatility in fuel prices this year, fuel prices were up almost 40% year-over-year in certain months. And I think has increased awareness of the value of data. So now we're seeing customers not just track their vehicles, but really understand fuel spend, match up fuel card transactions, which we're able to do on our platform, understand if there are any kind of security issues related with that. So they're able to really go deep with this fuel data and find savings. Many of our customers, they spend hundreds of millions of dollars on fuel. So even a few percent here and there with things like idling reduction or feeling up at preferred partners being done in a data-driven way is a big ROI unlock.

Next question comes from Matt Martino at Goldman Sachs, followed by Kirk Materne at Evercore.

Sanjit, maybe for you, just waste Intelligence and ground intelligence, they stand out to me because they monetize data generated by infrastructure that's already deployed. You've touched on that a few times. I guess, what have you learned from the initial 7-figure opportunities? And how reusable is that product model across other industries?

We've been learning a lot and the reception has been strong. So Dominic mentioned, we landed a large city deal that is benefiting from the ground intelligence. We've seen similar traction with waste intelligence. First of all, there's repeatability in those industry verticals. So every city is able to benefit from better visibility of these pot holes. They often send road crews out to go and spec manually and only get to a fraction and have to spend a lot of time doing manual work. That's just kind of same pattern with waste intelligence, where it would be things like service verification or maybe even missed revenue where you're not getting paid for picking up overfill dumpsters, things like that.

As we go deeper with our customers across industries, we're starting to see more of these patterns. I think these 2 stood out as initial applications, but I don't have new product announcements for you here, but we are seeing kind of similar groupings in other industries, but we need to spend more time in the field, figuring out, well, how can we take all this visual intelligence data, take all the sensor data and match it together in useful ways for our customers.

Okay. That's great. And then, Dom, for you, just emerging product transaction volume, you had 60 in the quarter or the $100,000 of new ACV. That's up from 42 last quarter. How much of that step-up reflects the product specialist motion? And where are you seeing the biggest impact across conversion, sales cycles, deal sizes?

Yes. That has definitely helped. We started with the product sales specialist at the beginning of the year. And if you look at kind of our growth over the last several quarters, which has been quite strong, a lot of that is being driven by the emerging product mix, 3 consecutive quarters now at 20% plus. And it's -- I think what we're excited about is that it's really widespread. As Sanjit mentioned earlier, we're not seeing one of those products contribute more than 50% in any given quarter. We're seeing strength across different industries with different use cases. And we've really increased our innovation, I would say, over the last 2 to 3 years, and we plan to continue to do more and continue to add more products into that emerging product bucket.

Next question comes from Kirk Materne at Evercore, followed by Matt Bullock at Bank of America.

I'll echo Mike, congrats on a nice quarter. Sanjit, just following up on the last question, just around the idea of the data that's being already captured by existing hardware that's out in the field. When it comes to products like waste intelligence, ground and some of your new ones, ground intelligence, does this help speed up the sales cycle, meaning you've talked before about your clients are going to have to walk before they run around AI. But these are very pragmatic solutions, they are obviously leveraging AI, but they're not as daunting as say, building an AI solution from scratch or something like that.

So I was just kind of curious the ability to have the sales cycle and the discussion from concept to delivery, would seem to be pretty straightforward. And I was just kind of curious how you compare that maybe to where you were with other products like invert facing cameras and things like that a few years ago, there would be a little bit of a flywheel effect there.

Yes. So Kirk, I think overall, sales cycles feel about the same as they have in the past. And when I think about why that is, a lot of these companies are really digitally transforming for the first time. So they still need to install telematics. They need to put those dash cameras in. The majority of vehicles on the road still don't have a dash cam, for example. So while they may be excited to do more, they're often having to start with that kind of Phase 1, like let's get the initial hardware in. But the attach of these additional products, which may be products 3 or 4 in a lot of deals, we're seeing these multiproduct deals happen, that helps increase the amount of ROI and decrease the time to value they see after the deployment.

So I would say the sales cycles are about the same, but the amount of value that customers are getting as they license more products is going up. And then it's also exciting products like connected asset maintenance. We talked a lot about the visual intelligence projects -- products earlier. We are starting to see great value come from that as well. But you're going to want the telematics in your trucks and your other assets as well, just to get really good clean data in.

And Dom, you mentioned just on the pricing side around the devices themselves. You mentioned you view it as temporary. Is there any sort of reason you have visibility into why you think it's temporary? Or is that just sort of the way it's always trended historically is think it will trend kind of back to where you were?

Yes. I mean, like these supply chain disruptions and changes are very dynamic, but there's several examples of them in history. Actually, we went through this coming out of COVID as well, where supply couldn't catch up with the demand coming out of COVID, and we saw prices temporarily elevated and ultimately kind of get normalized as more supply came online. And similar to many of these previous cycles, we expect that, that pattern happens again.

Next question comes from Matt Bullock at Bank of America followed by Nick Altmann at BTIG.

Maybe a quick one for Dom here. Obviously, a really strong quarter of $100,000-plus and $1 million-plus net additions. I was hoping you could just unpack maybe the underlying drivers there? Are you landing much larger? Are you seeing customers graduate into those cohorts as they expand faster? Anything would be helpful.

I think that it's been more -- maybe a little bit more on the expansion side. And so we're still landing customers at kind of similar sizes. It was actually our second highest number of new core customers that we've ever added. So we're adding a lot of new logos, but a lot of strength being driven out of expansions with our current customers. And I would say, one, big reason is the emerging products. So customers coming back and maybe Sanjit mentioned, the top 5 cities started in just 1 department with just the video-based safety and the telematics products but came back and went across multiple departments and then also added a bunch of new products like AI Multicam, Connected Asset Maintenance and the Ground Intelligence. So the emerging products are definitely allowing us to expand bigger with our customers.

That's great. And maybe a quick one for Sanjit as well. So you've passed the $2 billion ARR mark, you've got net new ACV contribution of 20% plus for 3 quarters in a row from emerging products. Maybe could you just help us think about the path to $4 billion through the lens of expected product contribution, core vehicle, some of the emerging products and then some of the products on the road map, how should we think about contribution there?

Sure. So Matt, I still think there's a tremendous amount of market opportunity even with these core products. I mentioned this a little bit earlier during the Q&A, but if you go and just look on the road at these commercial vehicles, the vast majority of them don't have a dash camera in their windshield. And so that just tells you a lot about the kind of state of affairs in terms of getting these devices out in the field.

And then to the point around new product attach, we think that this is an end. As these customers digitize the taking a look at how they maintain all their assets and their vehicles and equipment. They're taking a look at how they do training, how they manage qualifications of the frontline employees. So that's the opportunity is while we come in with this kind of core feature set that we're pretty well known for. Many customers say, well, we're doing this big project, let's digitally transform and take our operations kind of into this new era. And that's exciting for us because it means that we have room to run here, both in terms of the core TAM, but also our ability to stack on top.

Next question comes from Nick Altmann at BTIG, followed by Derrick Wood with TD Cowen.

I wanted to follow up on Matt's question regarding the public sector strengths. Dom, I think you alluded to some of the designated go-to-market efforts there helping influence some of the strength. But you also launched a public sector AI suite back in May, and some of these deals you're highlighting include ground intelligence and AI Multicam. So my question is just how much of the public sector strength is kind of being unlocked by some of the new innovation that you've done over there in the last several months here?

I think I would just like dovetail into the response that Sanjit just gave more broadly, I think, also applies to public sector. I think a lot of those deals started out, at least with interest in kind of the core products. But over the last couple of years, we've added more of these emerging products into the portfolio. It allows us to go into these accounts even for the first time with having a much more strategic lens on how they could digitally transform their city state departments. And I think that product innovation in conjunction with the focus that we have on the go-to-market side has really allowed this to be a strong driver of our growth.

Great. And then as a follow-up, field services, largest vertical in the quarter, you mentioned it was the highest mix in net new ACV. And I think over 2 years, which is really interesting. How much of the strength there is driven by net new logos versus some of your existing field service accounts adding products like connected asset maintenance or even some of the dispatching features within the agent Studio?

Yes. Similar to my previous answer, I think across the company throughout the quarter, but specifically even within Field Services, we did see great strength in new logos just in terms of the number of logos that we added, but in terms of the overall contribution to net new ARR, net new ACV within that given vertical, it was driven by a little bit more by the expansions to the existing customers.

Next question comes from Derrick Wood at TD Cowen followed by Mark Schappel at Loop.

This is Jared on for Derrick. Understanding that upmarket has been the focus for some time with this quarter being notably strong. I was hoping to get some color on what you've been seeing down market? Just maybe comment on what you've been seeing around churn, pricing, new logo activity or anything you think is relevant to address?

Yes. I mean maybe I'll give a quantitative answer. So we've talked about the -- if you look at the ARR mix from $100,000-plus customers going up to 63%. It's gone up, I think, I said like 4 percentage points over the last year, which means that, that segment that cohort is growing a little bit faster than the sub $100,000. But the sub $100,000 is also growing very quickly and it's still contributing greatly to the overall ARR mix.

Yes. And just from meeting with customers, I think these large customers, they have the largest, most complex physical operations, so they tend to have thousands and thousands of assets, often tens of thousands of frontline workers. So that's where we have more opportunity to expand with these new products. The smaller customers are still very healthy. And like Dominic said, we're continuing to grow with them. Their operations just tend to be a bit smaller.

I appreciate all that color. Last one for me. Could you just give an update on what you've been seeing from your data center exposed customer base? Any directional call outs this quarter versus the last?

Sure. I would say our data center customers, the folks helping with the build-out, they're busier than ever. They continue to be working on projects. And for them, safety and efficiency are very front of mind as they continue to scale their ops.

Our next question comes from Mark Schappel Loop Capital followed by Jason Celino at KeyBanc Mark on.

Dominic, could you just talk about whether you're seeing customers shift more of their spend to their primary CSP through marketplace programs and if so, how is that affecting your deal structure pricing or your go-to-market approach?

No. It's still -- it's standard. They're buying mostly direct through us. We haven't seen any real changes on that side in our sales cycles.

Okay. Great. And then just one other question. Beyond, it was highlighted that the Samsara network was an important opportunity. As your network gets denser, are you seeing any evidence of like a network effect and certain customer behavior. So for example, like higher attach rates, use case -- new use cases or maybe even like greater asset tag win rates as a result of a denser network?

Yes, I'll take that one. The network is continuing to get denser. We're also adding the ability to route the data through mobile devices and so on, which gives us visibility in yards and in warehouses and manufacturing facilities. I do think that's unlocking even more use cases for the asset tag. We talked about it on stage, but these asset tags have been attached to all kinds of really interesting assets, that were well outside the realm of the truck and telematics. So we're excited about that. And again, as the network gets denser, we're able to kind of get more visibility.

And then it's also enabling new use cases like the Tracking Label, which we also announced at Beyond. That's -- it's basically like a really miniaturized asset tag that only lasts about 45 days, but you can now stick it on one-way shipments, so you need a significant amount of network density for that to work. Otherwise, you can't pick up parcels and other building materials, things like that as they're cruising down the highway at 60 miles an hour. So I do think these are all kind of byproducts of the density we've achieved.

The next question comes from Jason Celino at KeyBanc, followed by Alexei Gogolev at JPMorgan.

Really phenomenal quarter. The net new ACV from Emerging Products, third quarter in a row of 20% plus. With some of your newer products at Beyond and with that cross-sell go-to-market team, you set up at the beginning of the year for the emerging products, has this been upticking on a percentage basis over the last quarter? Like would there be anything mathematically that would prevent us from seeing like a 3 handle on this metric?

It's been pretty consistent, above 20% for the last 3 quarters. I think that it's definitely growing very quickly that bucket of products. But I think it's also dependent on just how we're doing with our overall core products, which have also been very strong, as Sanjit mentioned, there's still so much opportunity in front of us just 50% of commercial vehicles in North America are still not connected and 85% of commercial vehicles don't have an AI dash camera. So that is still a really large portion of our ARR and growth. And that also has an impact on the overall mix. So we feel like we're going to need a lot of strength out of both core and emerging products to continue to sustain our high growth.

Okay. I see. And then when we think about the emerging product gross margin implications, as this becomes a bigger part of your business, I realize it's a lot of different products, but anything to help on like how that might skew the unit economics on your overall business?

Yes. I think it definitely can. There's a wide variety of kind of products from like AI Multicam, all the way to like software-only SKUs. So the gross margin dynamics within the emerging products is very different. I think the way that we think about it is that most of these deals that we're talking about are multiproduct, they're bundled. So it really makes more sense to look at it kind of that way versus stand-alone. So what we're looking at is like can we increase the revenue per device. Can we increase the revenue per asset, whether that's a vehicle or field asset. Can we increase the overall ARR per large customer, all of those things continue to happen? And can we do so while maintaining our target net retention rate of 115%. All of those things are working for us.

Our last question today comes from Alexei Gogolev JPMorgan.

This is Isabella Camaj on for Alexei. And thanks for the examples on agents within safety and warranty workflows, a lot of excitement there. Where would you say agents are moving into production fastest today, maybe comparing safety versus maintenance versus dispatch? And within your customer conversations today, what are really the largest priorities customers have as they consider scaling beyond pilots?

Well, I would say on the asset -- sorry, on the agent side, the few that you just mentioned are some of the most common use cases and they're not exclusive. A lot of these companies are saying, hey, if we're going to put voice agent to work, let's have them notify the driver as they're pulling up to a gate and give them some directions. And then they're familiar with it, so they can do a safety briefing in the morning. So these tend to actually be multiple sort of agents adopted in the same organization. I do have to say it's early though. For our customers, this is, in many cases, the first time they're deploying AI agents into production. So we're working with them to help them understand how to think about it, how to configure how did change management for drivers who may be interacting with AIs for the first time. But overall, the feedback has been positive. We're excited about these early signs.

This concludes the question-and-answer portion. Thank you all for attending our Q2 fiscal year 2027 earnings call. Before I let you go, I have a few short announcements. We will be attending the Goldman Sachs Communacopia Conference in San Francisco on September 8, the Wolfe Technology Conference in San Francisco on September 10, the Piper Standard Growth Frontiers Conference in Nashville on September 15, The NYSE Investor Access Technology Day on September 23, the Morgan Stanley Silicon Valley Bus Tour also on September 23, and the William Blair Tech Innovators Conference on October 9. We hope to see you at one of these events. That's it for today's meetings. If you have any follow-up questions, you can just e-mail us at [email protected]. Bye everyone.

All right. Good afternoon, and welcome to Samsara's Investor Day. My name is Mike Chang, and I'm SVP of Finance here at Samsara. And first off, just thank you all for making the journey out here to a very, very hot Las Vegas to join us in person. And it's amazing to see so many familiar faces in the audience. And for those who are joining virtually, it's great to have you on as well.

We have an awesome, awesome agenda pack for you today. We have about 2.5 hours full of content, and we're going to talk about how we're bringing AI to the world of physical operations.

Before we get it started, there are a few housekeeping items. The key 2 things is, first, we're going to be assessing forward-looking metrics during today's presentation. These should be taken in addition to -- sorry, these statements contain risks and uncertainties, and these are detailed further in SEC filings and our Investor Relations website. Second, we'll be talking about non-GAAP financial metrics, and those should be taken in addition to our GAAP metrics and reconciliation is provided in the appendix for today's presentation.

So at Samsara, we're connecting our customers' operations, we're bringing AI to the physical world, and we're making a huge impact for our customers. Super exciting. We've reached $2 billion of AUR, and we have over 13,000 core customers worldwide, and we're just getting started. So super excited to bring on Sanjit, our Co-Founder and CEO today; Johan, our Chief Product Officer, David, our VP of Products, Amit, our Chief Revenue Officer, 2 of our own customers with Primoris and Performance Food Group.

And then also Dominic, our CFO. Just like we do with all of our customers, we're trying to build a long-term relationship with each of you. And so we hope that you'll leave today's presentation with a better understanding of this multi-decade journey we're on. So with that, I'd love to bring sanjit on stage and pass it over.

Thanks, Mike, and thank you all, again, for making the trip out. What I'd like to do is start at a very high level with what we're about at Samsara, our mission, and then we'll get into products, and you'll even see some demos for me and Johan in a few minutes.

So starting again with the mission. We're a technology company. And our role in this is to help enable all the physical operations companies you see here at our conference to be safer, more efficient, more sustainable in the operations that they run. And if you think about it, this wave of digitization has been mostly focused on corporate office space enterprises, especially when you think about the impact that AI has been having, which is, of course, the big topic of conversation right now. And at this moment, we're seeing a transition happen where AI is going from those white-collar industries, industries like legal, customer support or finance or even software engineering now into the physical world. We can now apply AI to industries like construction, energy utility, waste management and field services. And you can think of this as this transition that's happening from the world of bits to the world of atoms. And when we think about the why now, there's a number of just amazing, incredible tailwinds that are back. First, there's a broad interest in digitization. So generational change that's happening, especially in these frontline industries where people are in their 40s and 50s. They're saying, well, why am I not able to see this on my phone in the field? And then, of course, with AI, there's a why now that's happening right now, which is that AI is becoming more powerful and more transformative every single year. If we look at these trend lines, if we look at the graphs, you can look on the cost side, where if you think about a certain level of intelligence, the AI models have gone from being models that cost $60 per million tokens down to just $3.30. That's incredible. It's an 18x cost improvement in a span of about 1,000 days. Very few technologies adapt that quickly. And if that wasn't enough, the capabilities made possible by AI are increasing constantly.

And this is coming from all the different Frontier labs competing. We've seen AI capabilities increase from the point where we were a few years ago, where it was a simple chat bot to now where we can build an agent that performs, work, plans out multistep tasks and executes them on behalf of our customer. And that's an incredible breakthrough, of course, that's going to have an impact in the world of our customer.

So at Samsara, we are bringing all of these new technologies like AI into the physical world. And it's important to recognize that this is a multistep, multiphase approach. And again, this is very practical. Most of these industries I talked about earlier, they're largely off-line. They're largely disconnected. So we start with the basics, which we call Phase 1. It's about collecting data. This means deploying hardware out in the field, getting GPS trackers on all kinds of devices, getting cameras out there, so we get visual and situational awareness. And then once we have our hands on data, we can go to Phase 2, which is using AI to go find insights in this data, find the patterns in the data and surface them to our customers. And then at the tip of the pyramid, you'll see Phase 3. This is what agentic automation is all about. Now once you have the data, once you've got AI analyzing, you can start to take action. Most of our customers are in Phase 1 or 2. And most of these industries are actually in Phase 0. They have not yet even deployed all this technology. So we're still very much in the early innings, but these industries are absolutely massive, which brings me to my next point. Because if we go and take a look at the base of the pyramid, the opportunity that we're faced with, it's absolutely enormous because these industries are enormous. They make up about 40% of the world's GDP. You see a bunch of different photos from our customers here. Hopefully, this kind of broadens your thinking about what we mean when we talk about physical operations. We do a lot of work in the world of transportation, logistics and food and beverage distribution. We also have customers that run big fleets of yellow school buses, oil and gas companies that are involved in the energy industry, waste management companies, construction customers and utilities. And if you think about these customers, they have operations that are both asset-heavy and labor-intensive. So we want to help them on both sides of that equation. So if you think more about Phase 1, what you realize is very quickly, we need to collect data about the environment. These are not tokens you're going to find online. They're not build on a website. We need to collect these bits of data from vehicles. So that's why we have products like our Vehicle Gateways. We need data about trailers and construction equipment, which is where our Powered Asset Gateways and Asset Tags come in. And then the visual environment has a tremendous amount of data value as well, which we'll talk about over the course of today. That what our AI cameras do and we want to collect data from people. So we have data from wearables and workflows that come from apps. I mentioned this earlier, but this environment is largely disconnected still. If you zoom out and take a look at all the commercial vehicles on the road here in North America and Eastern Europe and just crack them open, see how many are running connected GPS trackers, you might be surprised to see that only about 1/3, about 34% of them are currently connected from a telematics perspective. If you look at construction equipment, powered equipment on this slide, you see a number that's even smaller. It's only about 13%. And then if you think about unpowered equipment, all the different tools and other assets that are required to perform work in operations, it's very small, sub 1%. So there's a lot of market out there. But deploying this hardware requires assistance. We need to help with change management because we're getting all of this equipment connected, which means bringing it in, putting these devices on there. We're getting apps and hands of frontline workers. Many of these companies have tens of thousands of employees. And this is a new technology that's part of their daily workflow. So we help with that. And this is part of our durable and long-term advantage as well.

And then at Samsara, we love data. We collect a lot of it. And at this point, when we look at how many different data points we've been collecting into our cloud over the years, it totals to a number that's over 60 trillion. These are all different kinds of data points. We've got data from all different types of assets, vehicles powered, unpowered equipment. And like I said, data comes in multimodal forms. So we have GPS location data. We have engine health and diagnostic data. We have video data, both externally and in terms of driver behavior. And we have this in terms of a lot of different customer industries, customer geographies and customer sizes. So this time series data that we've been collecting for over a decade now is leading us to find insights in a way that was never before possible, and that's servicing value for our customers.

Okay. So now moving up the stack to Phase 2 in our strategy. Once a customer's operations are connected, we can find a lot of value in the data I just said. And for the first time, we're able to correlate all the different bits of data together. I'll give you a few examples. So fuel is a big topic of conversation this year. Price of the pump is up 30%, 40%. And so for many of our customers, this is an enormous impact to their operational budget. They are looking for ways to find savings in their fuel spend. We can find in a number of different locations. So one is simply understanding where are they being inefficient. Maybe they're idling their engines too long or maybe they're operating the wrong equipment, they can get better miles per gallon, if they ran something else. Or could be behavioral. It could be training the drivers or rewarding them for eco driving. And it can even be related to where they're buying fuel. Maybe there's a better provider for them if they just drove another half a mile. These are all bits of data that are in our data set. We can find it for our customers, we can surface it in the form of fuel insights. We can do this for benchmarking. We can do it for fleet utilization. We can tell them if their assets are underutilized. Some of these customers, they have balance sheets that are hundreds of millions, even $1 billion plus just in terms of assets. So these are asset-heavy industries. And this list goes on. You can apply this to maintenance, you can apply it to weather, to routing, navigation and so on. And then if you think about this, it's all about ROI. The world of operations, it's an area where ROI is incredibly important. Like I said, these are asset-heavy, labor-intensive industries. And we've seen a survey -- or sorry, a study done by IDC about a year ago where they went and talked to our customers and found there's an 8x ROI that they're getting from utilizing their equipment more efficiently, maintaining their equipment in a more efficient way, fuel savings, accident cost savings. And now as we start shifting our attention to what's possible with agentic AI, we're able to help with task automation, which helps free up some of that labor budget. And we'll increase the ROI as we'll talk about over the course of the afternoon, which brings me to that top of the pyramid, which is Phase 3. We now have the ability to build AI agents that can really perform tasks on behalf of our customer. This morning, I demoed a maintenance agent, and we'll go a little bit deeper into it today. With the maintenance agent, we can do things like understand in a predictive way what's likely to break based on the data we're seeing in the field. We can set up work orders. We can do things like warranty claims, task work that would take hours and hours on a per vehicle basis.

On the safety side, we can automate so much of the task work that has to happen to coach thousands or tens of thousands of drivers at scale. We have worker coaching workflows that are automated. We have ride alongs, as Johan showed this morning, we can do post incident reporting. And then we can even change the safety settings on a driver-by-driver or equipment-by-equipment basis, work that would be too cumbersome to perform manually.

And then this also applies to dispatch. There are so many different back-office tasks, if you think about it, load assignment, providing better ETAs to end customers and even things like shift length compliance. These are the practical day-to-day tasks that have to happen to keep an operation money. And then on top of all this, we can layer things on like 2-way communication with the front line. We can do that with our systems that are deployed in the cab. We can offer automations like weather alerts and start-a-day briefings and workflows. All of this was stuff we demoed on the main stage this morning, and hopefully, you've had a chance to talk to some of our customers here about it.

All right. So I'm going to go a little bit deeper on one of those boxes, which is maintenance. I'm going to put this in the context of the 3 phases to show you how does we collect the data, find the insights and take action for our customers. So the first step, as I mentioned, is Phase I. It's collecting data from the field. The second step will be around finding insights and things like fault codes and diagnostics, predictive models. And then the third phase of this is around automation, so things like warranty claims and order management. I don't have much hardware here on stage. So let me start with the slide explaining what Phase 1 really is about. I think many of you know, we have a Vehicle Gateway product. This plugs into the diagnostic port of a truck and communicates directly with engine computer. It's an amazing source of data because we can get a lot of information about things like fault codes, but also engine performance. How many miles per gallon the truck is getting? How heavily it's loaded when it's going operating different conditions. We also have other forms of data that come in. In a given year, we see north of 300 million vehicle inspection workflows. These are the walk-around inspections that drivers do. And this is a context that's really valuable from a maintenance perspective because you can see the trending, what's happening with the vehicle over time. This is information you're not going to get in the diagnostic report because it will tell you what the conditions look like on the outside. And it's also very unique data. The OEMs don't have it. The service centers don't have it. And then there's additional data from the maintenance shop. We have work orders. We have other kinds of maintenance inputs that come to our API integrations. We can even integrate with OEMs directly cloud to cloud, and it gives us additional context. So this is Phase 1 of the data collection that goes into maintenance. The other 2 phases I'll show you here on the screen. So if we can flip over to the demo. One sec. Okay. So this is our Samsara dashboard. I'll do some demos here and then Johan and David will be up as well. But this is exactly the same system that our customers use. And I'm going to be live demoing it for you, so you can see how this data comes to life. So for a fleet, you will have hundreds, thousands or tens of thousands of vehicles. Most of our fleet customers, they have been used to operating these vehicles for decades. And the maintenance process tends to be pretty manual. They have a combination of paper checklist, so pen and paper workflows that we're going to go check on the vehicles in the yard, interactions that happen with the driver. So if something is wrong with your truck, you'll come in and let the maintenance technician know, and just expert knowledge that comes from years and years of experience dealing with these trucks. So here, what we've done is try to streamline all of that into a single system where the maintenance tech can come in, in the morning, log in, and they can do this from really anywhere and see at a glance the state of their fleet. And we help them prioritize their work. So you can see here that the AI has figured out, there's a couple of units that need a little bit of extra attention this morning. So I'm going to click in on the first one. And like I mentioned earlier, we're collecting data. That's the Phase 1. We've got data off the diagnostics board. In this case, I picked on a truck that's showing a fault code. And we know the make and model and year of the truck. So we know it's a 2024 Freightliner Cascadia. We also know what kind of engine it has. The Cascadia comes with engines from Cummins. It also comes with engines from Detroit Diesel. This one has a DD13 engine, and it's got a fault 3251, which is related to one of the exhaust pressure sensors. There's a bunch of detail here basically explaining what this fault is about and what some of the recommended actions are. Then I'll scroll down. And you'll see the power of this kind of Phase 2 data that we have and the massive data asset, we've accumulated with the 90 trillion data points. Because we've seen millions of vehicles over time, and we've seen the thousands of different fault code combinations they have in the vehicle performance, and we've seen it over a decade plus, we can do things that tell you how big of a deal a fault like this is. These kinds of complex diesel engines, they have engine faults all the time. Many of these are warnings, informational or maybe emissions related. So they don't result in operational downtime. This one, though, shows up as a moderate fault. That means we're going to want to do something about it. You may be wondering how is it that we know that. And it's because in that data set of 90 trillion data points, we've actually seen 107,000 of this specific type of engine. We know what happens to these engines over time. We know how they perform. And so we've analyzed those. And we've seen that only about 0.25% of them never show this fault. So that's really valuable information. And then like I said, we can piece all that information together. So you can see the fault code chain. You can see here that there's an exhaust pressure sensor issue, and the repair cost is $100 to $800. That's handy for the shop tech to know. And there's a predictive insight there. This says 22.8% of these vehicles progress to the next more severe fault code in 518 miles. So it's very technical, but that now gives me a sense as a shop tech of whether I need to take that vehicle off the road, call the driver up and tell them to turn around, disrupt their whole day or whether we can handle this at the end of the day, maybe at the end of the week, very practical decision-making tool.

If I click on this next box here, this is what happens if we don't do anything about it. Default becomes more severe. That's the likely pathway and the repair cost goes up, now it went from a couple of hundred dollars to a couple of thousand dollars. If we don't do anything about that in 175 miles, the repair cost would go up again now to maybe $3,900. For our customers, they spend about 10% of their operating budget on maintenance. That's an enormous expense for them. And so it's helpful if they can get to these tasks early and nip them in the bud, basically save their companies a lot of money in terms of operating budget.

Okay. So this is the Phase 2 side of things. This is the insight that AI can give you. Now let me go up and show you how we can start automating a lot of the task work that has to happen to maintenance. So I'm going to click check warranty coverage here. And again, maybe for some context, most of our customers, they procure hundreds or thousands of vehicles every year to keep their fleet refreshed. They do this. And in that process, in their procurement agreements, they have warranty coverage contracts similar to probably the warranties you will have on your cars. But these end up being custom agreements. It might be based on the workload or the environment they operate in. And they have specific coverage areas that they care about. We can upload all those warranty documents into the Samsara cloud, use it as context to power these AI workflows. So what I did is I clicked on check warranty coverage. It fired the engine. It looked at the warranty coverage docs, looked at the fault code and the specific vehicle and said, yes, actually, this is a covered service task. So that means that this customer could get paid back for those repairs because they're still in the warranty period. It understood the document, so it knows that we're within 60 months or 100,000 miles, and it actually tells you what's covered and what's not covered. So you can see some additional notes here. And then you see it's offering to fill out a workflow -- work order. It could do this automatically by the way, before I came in, but I wanted to do an interactive way to show you sort of the steps that are happening. So we can say, -- yes, thanks. Okay. And now what this is going to do is take those documents. There's a lot of additional context in there about what needs to appear in the work order. It can go and query the vehicle, pull in all the information that's needed for work order and then combine it together in the system, very quick process here. So we see unit 1063, it pulled the odometer, it pulled the engine hours. These are all kind of standard fields in a workflow. It's got the description. Let me just go scroll down here a little bit. And then you see the service tasks. So this is what would be required in order to get coverage from the Detroit Diesel warranty. You usually have to provide some documentation, photos, some checklist, things like that. And it's all here. It's all streamlined. And the reason I wanted to go through the step by step is it gives you a sense of how much work the AI is able to automate and to streamline. If we did this the manual old-fashioned way, you'd be cracking service manuals, understanding what that fault code was, you might be calling drivers and asking them to look at stuff on the engine. And then in order to figure out if it's covered by warranty, you're reading through all the warranty docs. And then the last piece here is you have to figure out exactly the checklist. It's probably 2, 3 hours of work. When we talk to our customers, they tell us, they know a number of their repairs are covered under warranty. They probably only claim about 50% of those warranty dollars because this work, this task work isn't happening on a regular basis.

Okay. And then one more thing here, I can say, do any other trucks, the same fault? And this is, again, something that our customers will often do. They've been in operations long enough to know that if there's something happening on one truck, it might be happening on other trucks at the same time. Again, the system typically does this in an automated way, but it's helpful to see how we can go through a multistep process. You see it broken down there. This ability to plan is what's made these agents truly possible. So it went -- figured out what the code was that we care about, figured out how to ask or interrogate all the engine computers about it, wrote the code, deployed it, ran it and told us the answer. And is saying, yes, there is another unit that's got this issue. So very practical, very real-world use of AI and agents. But this is the kind of thing that we're excited to get in the hands of our customers because now it's possible for them to automate the hours and hours of task work that would have to happen. And then you multiply it out by the size of their fleet, maybe all our different regional operations, and you can see where the value unlock is coming from.

Okay. We can go back to the slides here. So I mentioned earlier, ROI is incredibly important in the world of operations. And we've talked about ROI that we've studied before. ROI that you're going to get from the compliance workflows and the reduced asset downtime. That's about 8x ROI. But then when you layer on the opportunity that comes from this labor automation, the ROI goes up even further. So we can do things like warranty recovery that I just showed you. We can help with things like shop efficiency, scheduling, which order these trucks come in at and whether you combine preventative maintenance with some of these predictive maintenance items. And then there's additional agent ROI opportunities as well. So we think conservatively, this takes ROI from 8x to 10x or even more. And I mentioned that a lot of our customers don't claim all of their warranty dollars. For some of these fleets, that opportunity alone is worth $10 million to $20 million. So there's a significant amount of expense that goes into maintaining large vehicle fleets today. So we're in the early innings of what all this looks like, but we're excited by the initial traction we're seeing. We're excited by the ideas that we're hearing from our customers, about how they want to use all of this stuff.

Okay. And then let's talk a little bit about the data. So I went over it fairly quickly. And a few of you may be wondering, well, would it be possible for a customer to go get those insights else? Could you just put an AI on top of their existing data, maybe API it from a different source. And that would be a reasonable approach. And you'd be able to look at your fleet data. So you can see all of your trucks, for example, and all those current fault codes perhaps. And that would give you insights over about 1,000 vehicles. And you might have, call it, 2-dozen different makes and models operating your fleet. But to get the true predictive insight, you need the volume of data that I talked about earlier. We're talking about millions and millions of vehicles, thousands of different fault code combinations. Engine profile data, you can understand how these actually operate over time. And then you can see it over the span of a decade. That is a tremendous volume of data, which is what powers and unlocks the value that I was talking about earlier.

So I've talked a lot about what we can do today. But for us, as a company, we know we're in the early innings of this opportunity. We know that this is a world that's going to be digitizing very quickly. And our customers are going to be around. They're going to be relevant because we're always going to have physical operations work to do. There will always be new buildings, new data centers that need to come up out of the ground. The grid modernization product or projects are likely to go on for a very long time, and there's always roadways to maintain. So if we think about industries like construction and imagine what these might look like, call it about a decade or so in the year 2035. We see a picture that look something like what you see on the screen here. This morning, David talked about how we're introducing the new Tracking Label. We'll talk more about it here on stage. We see products like the Tracking Label being used for all the building materials, so you can understand where everything is in terms of coming to the site and when the site is ready to perform the work. We see automation coming in, in the form of autonomy and robots. Think about all the materials that have to be moved on site. The heavy lifting, the dangerous work. We see autonomous diggers, forklifts, cranes but also materials movers, all kinds of handling equipment coming on to the job site. We even see drones and humanoids on the horizon. We're not quite there yet, but it's going to happen. There's going to be so many different ones of these, different makes and models, doing different tasks. And we want to be able to orchestrate that. And we see an opportunity to turbocharge or super power, all the people, to help them orchestrate all this work. We're going to be doing this on different kinds of devices. It could be tablets, could be wearable devices like smart glasses, could be in their headsets where they're commanding all these operations by voice. This is super exciting for us because we know that there's so much opportunity here to have an impact. Okay. To tell you more about how we're going to build for this future, I'd like to turn things over to our Chief Product Officer, Johan Land.

All right. Thank you so much, Sanjit. And [indiscernible] it's great to be here with you. Let me back that one. So it's great to be here with you. And I'm excited to talk to you more about physical operation. It's a really, really important part of society. And what we are doing is that we're building the agentic layer for that. As you just heard from Sanjit how agents are now automating tasks, and I want to go deeper into this and talk about the platform that makes this possible. Now before we go there, I'm just going to spend 1 minute. I think this is the first time we meet. So just about myself briefly. So I've been in tech for the better part of my life. And for the last few roles, it's really been in various forms of operations. At Waymo, I built the commercial PM team. Think of that as the -- we built a service on top of the vehicles. So lost and found, repairs, positioning of vehicles, maintenance, charging, refueling, but also the mobile app acquisition, pricing and all those things you need to build a service on top of it, and took that to first revenue.

And my last role was TomTom, which is navigation and routing, both together with OEMs, but also for enterprise. And excites me -- really excited about Samsara is kind of the platform and the ability, like the connection with customers, the deployment of devices, the gathering of data. And that's really the key thing here. It's the data. And we just have an enormous -- and it really means there's enormous amount of data. And effectively, one way of thinking about it is that over the last 10 years, we've pretty much put sensors on everything, millions of equipment and tools and vehicles, and they are sending data back to us. And we're gathering this enormous amount of data that we then can use to build really exciting things. This all sits inside of this platform. And as you can see on this chart, this is the data gathering is just accelerating. And then we use this data to train models. And as we get more and more data, the models get better and better. So that's the basic principle of it. Now Sanjit, Dave and I will cover 3 new products for you now. And the first one is agents, and that's exactly what Sanjit spoke about. The agents sifting through this data, extracting conclusions and taking actions for our customers. And secondly, I want to talk about how we're extending this to operational AI, like these are new capabilities that we're getting from this data and the AI that opens up new problem areas and new markets, things that we haven't done before. And I want to talk a little bit about that.

And lastly, David will talk about the Tracking Label that you saw earlier today. And to put this in context, the new products that we have, the new emerging products are already more than 20% of net new ACV. So this is not something that we're exploring. This is already a key growth driver of the company. And in addition, these new products opens us up for new pricing opportunities, in particular, consumption pricing. And what this creates is an ability for us to really go deeper into the problems together with our customers, solve harder problems that creates more value for them, but we can only do them because we can now build as the AI and the agents take actions and create value. That's the other new thing here. Now we really came from a place, focused on driver safety to the left here. And we started there naturally because that's what our customers asked us to do. Like they get into a lot of accidents and making their operations safer, brought great ROI for them. So we followed the customers. And that's always been the logic. We collect all this data, and then we solve the most important problems and pay points for our customers. And that includes things like drowsiness and mobile phones, following distance and what not. And we're still doing that. And by the way, it's a pretty good market. It's a growing market, and there's lots of room to grow in there. But today, I really want to focus on the left-hand side on this chart, like the new horizon that is opening up because we have all this data from the sensors that we've deployed, like new operational AI detections. And here we use these cameras, right, and combine all of this together with improved AI. And when we do that, just like magic, to call it, whole new use cases open up. These are things like vehicle pushback on a tarmac or road defects that need repairing, and detecting road blockages that we then can route around like things to make it more efficient. And today, I'm going to talk specifically about 2 of these. The first one being waste intelligence, garbage trucks and such and the second one being ground intelligence. Starting off with with waste. And by the way, these industries, they are huge, right? They are often very, very labor intensive, which leans itself really well to AI and agents.

But Waste Management starting off is a $1.6 trillion global industry. And we've already got $7-figure deals in the pipeline on this one. And I want to show you this. If we pull up the dashboard, I can show what this looks like, let's see, there we go. So this is American Waste, and this is their operation in the Tulsa region. And what you see here is it's the routes that they are driving or have driven. There's nothing really new here. We have been doing routes for a long time. But the new thing here is that we're integrating into these garbage trucks, literally connecting to them. We can see things like when the arm goes up to pick up these garbage cans and dump them, of course, we install cameras in them all around up to 10 cameras, by the way. And what this gives us the ability of doing is to see what's actually happening. Like this. There's a pickup, we get the video. We know that the pickup happened because we're connected to the arm that picks up this. So we know therefore that pickup happened. We collect all the data and observe it, right? That may not sound like a lot. But the things that in these types of operations, there's a lot of stuff happening. So drivers would miss a stop like this, or maybe the customer forgot to put out the trash cans. And the way this is handled today is that the customer will call in and say, "Hey, you didn't pick up my trash, right? But because the customers -- the operators of this garbage truck, they don't know why, so they end up sending out another truck, don't worries, we'll send up a truck to pick it up, right? Very simple, which is additional cost for them. But the thing is this. It's actually a billable event. They didn't pick up there -- if they didn't put out their trash cans for pickup, there should be extra charge for that extra drive. So leaving revenue on the table and they're taking extra cost because they don't have the visibility.

Another example of this is overfilled bins. It looks like this. As you can see, it's overloaded. And garbage companies, they have policies for this. It's either 3 or 6 inches, you can overfill. But if you go above that, you got to pay for it. But the thing is that the drivers, they're just getting on with their day, right? They're just trying to get through. A Side loader can have 1 -- upwards of 1,000 pickups in a single day. So the drivers getting through, trying to get through their day. The company doesn't have any visibility, so they don't bill for these ones, right? They just pick it up, take the extra cost for the extra garbage without billing for it. And this enables them to actually charge for it. And by the way, these problems -- another one is -- the list goes on, contamination, customers throw the wrong trash in the wrong bin, they just pick it up and hand it on the backside, by sorting, the list goes on. The thing is that these are problems that they currently cannot solve, right? They're unsolved because they couldn't connect et cetera, and the AI wasn't there, right? The data wasn't there. And by the way, this $1.6 trillion, like, this is what they do. They drive garbage trucks to pick things up. And these things that I just showed you, they're integral to that process, right? It's not a small thing. So this is just 1 example of us taking all this data and the AI and taking the advantage that we have from everything that we already deployed and going deep into a vertical, solving problems and creating value.

But another example of this, we're doing this industry by industry. But another example of this is public sector. In public sector, there are many things that are happening, and we're knocking them off one by one. But one example is potholes. And pothole is a $3 billion or so kind of damage that comes from people driving into them. And the cities are actually liable, if someone drives into them and get damages on the vehicle or even worse. So therefore, they are eager to repair them. It's also very visible to the citizens. Mayors are very focused on this. Those of you from New York. This is like Mamdani's first win, if you saw one. So like mayors really -- we got some laughter. So it's actually very visible, and that's also we approach the mayors for it because they want to show wins to their citizens, and it's also visible to citizens. We don't like to drive into potholes. Now the way that cities handle this today is that they get a 311 call, they answer it, someone claims there's a pothole there. They send a vehicle, drive out and check it and make a determination of whether they want to repair it or not. That's quite a lot of work. So I'll show you what this looks like once you connect it to -- once you use our data, our sensors that are already out there. If we flip to my computer here. So this is -- we call this ground intelligence. And the first thing out there is really like the pothole detection, right? But that is material in itself, but that's just the first thing, like we can use this to see like broken guardrails, we can see low-hanging tree lines or power lines. We can see graffiti, encampments, you name it, like with cameras, and we drive 99% of the roads in the U.S. So we can see it all, right? And by the way, also, we've already ingested this data, right? There's no deployment. I'll go -- get back to that. But here -- so here's the city. This is Kalamazoo. Yes, this is Kalamazoo. So in this case -- and this is a customer that's testing this out right now. So as you can see, there are 4,000 pot holes that we detected here from 28,000-or-so observations that we've gathered. So there's a lot of potholes even in a small city. Imagine answering those calls, sending people out to checking all of these. It kind of doesn't scale, but we have visibility on all of them. And then we can actually in this tool, we can filter down. Let's look at some potholes here. And by the way, there are different flavors of potholes as far as I've learned. But we want to just look at not just crackings and whatnot, but the actual potholes.

Let's take a look at this one. So here -- so here's an example. So here, we're driving past, and you can see the potholes there. Now we detect this not just from the camera but also from the integration into the vehicle and all the other sensors we have. In this case, we're using GeForce to detect it. And then we run AI on top of that to identify the potholes. Now in this case this was on April 29, but we can actually here see how this has progressed over time. And as you, you saw it was a little bit rainy here. Portholes grow. They grow day by day when under certain conditions. So you're sending a vehicle out to check it is not enough. Like you need true visibility onto this. But we can see here how it's developing over time and how it's progressing. You kind of see it's getting deeper here. This is a month later, but they can grow even faster than that. And then towards here, if we scroll down, here, they've actually repaired it, or they have patched it. It's called they have just put -- eventually, they're going to have to repave this one. The point here is they don't have this visibility. They're sending vehicles out to do that, that cost money. They can't do it enough, so they actually don't know where they are. These are progressing quickly. That's a point for them. The point for us is that we already have the vehicles. The vehicle is already camera. We've already taken the cost to upload and handle all the data, right? So this we can deploy and sell without hardware, immediately deployed. We could build this for every city. [indiscernible] go approach them to just show them where the potholes are. So it's a software product in that sense.

So let's see. Yes. So exactly. So that -- so this is just like some examples of the type of operational things that we can do. And we're now working through this, like to see what are the most important problems, what are the verticals that we should go after, et cetera. but it's all enabled by the platform, devices, the sensors that are already out there.

Okay, cool. So with that, how about to hand over to David, and he'll talk a little bit about the Tracking Label.

Good afternoon. my name is David, and I'm Vice President of Products and Engineering for our Connected Equipment business. I want to take a step back to sort of Phase 1 and show you what Phase I actually looks like on a map. So this is the Samsara network. We talked a lot about what this data asset looks like, what we can do with it. This is what generates it. And it's kind of easy to not appreciate what you're seeing on the screen. The depth of it are remarkable. Each one of these dots represents a snapshot in time, a 1-hour snapshot of what our network our installed base looks like. These dots, they're everywhere. From this Zoom level, it's a little tricky to see, but they're on the road, of course, they're in residential areas, from buses and city vehicles, but they're also in intermodal yards. They're in airports like ground service equipment, they're everywhere. This network, as it turns out, is one of the key enablers for us to build new products. So you're selling ground intelligence, that's one of the products you build off of it, Asset Tags and another. Today, we're going to introduce a new one, it's the Tracking Label. But what is each one of those dots? What's actually sitting underneath there? Well, each one of those dots have gateway on there. It's got a camera. we can leverage both of those to build new products. So you just saw some of the ways we can use the network of cameras out there, there are millions of cameras that are buses and bulldozers and trucks. They also have gateways, which have Bluetooth. And so we can use that to build products like the Asset Tag that we launched a couple of years ago. So these 2 together can work to create net new experiences that would not have been possible several years ago. We are able to now change the paradigm from building a product for one vehicle for one customer, to a product or a suite of products that we can now work at scale across multiple. So of course, a few years ago, we introduced Asset Tag, Bluetooth-based device, that was really purpose-built for durable equipment, construction equipment, things like generators, concrete saws, fiber splicers, things that go lost and it's all about theft and lost recovery. A couple of months ago, we introduced a new version of the extra small, XS. And with that because our customers said, we love Asset Tag, but we've got even more equipment out there. Every time we shrink the device, we discover this whole new universe of assets. That's things like PPE and fire extinguishers and trucks and portable gas meters and the like. And we've seen that together, these products have really add a lot of value to our customer, getting ROI through. That's a loss recovery but also through managing this inventory at scale.

Over time, we've also adopted the networks to be more than just location. So of course, you've seen the cameras, but we can use the Bluetooth for data. You can actually transfer data over this Bluetooth layer. And so we introduced a tank level monitor, and that does location and sensor data. Then we introduced a wearable. It does location and sensor data, even voice over Bluetooth. So this network asset is a tremendous backbone for us to be building on top of, and it's been really valuable for us and frankly, an accelerant to build new products and deliver more value to our customers. But today, we launched our brand-new Tracking Label. So this is the TL11. And the way to think about this is that it's a single use purpose-built Asset Tag for shipments. So think about situations where you have one way of visibility. You can consider things like GPUs need to make it to a data center or pharmaceuticals [indiscernible] to make it to hospital, really high-value, really important things that need to make it from point A to point B, where customers are not interested in the reverse logistics or the return of that asset. Just got to go to point B and then never think about it again. and this is a really acute problem in the industry. Customers actually use Asset Tags to do this, but they're just not purpose built for it. So today, we've introduced this thin flexible disposable tag, last 45 days, once it's activated, it's got about a 9-month shelf life when you turn it on and activate it with our new shipment app. The last 45 days, provide visibility from origin to destination. There's no lithium in this. There's no hazardous materials. As soon as it gets the destination, we automatically stop tracking it because we've geofenced that destination. The network density allows us to discover it's been delivered. We stop tracking it, and it can be disposed off safely. We've made it realistic and economical for our customers by putting it on a consumption-based model. So this is not a subscription based, it's a consumption-based model, which is -- makes it palatable for our customers.

One of the interesting aspects of the Tracking Label is it's opening up a new market for us. So we primarily or historically have thought about customers with fleets of vehicles and assets. There's a whole other aspect to this world of physical operations with organizations that don't necessarily have heavy infrastructure in trucks and trailers and so on. They are Shippers, they're actual manufacturers of the goods that this whole ecosystem sort of exists and move their goods around from point A to point B. There are folks in retail like Nike, of course, and electronics, NVIDIA, there are folks in automotive, like Bosch, and these organizations have a real problem on their hands. They've got situations of cargo thefts. We all hear about that. There's also operational visibility and downtime and decision-making that we have to make. And so these are really the motivators for us to think about how to actually go about building a product like this and what caused us to go build Tracking Labels in the shipment center that I'm going to show you soon. We are also using this ourselves. So we have an aspect of our business that is logistics, and that's shipping our hardware devices to our customers. So we've actually been eating our own dog food on us for the past several months and partnering with other customers as they deploy this and getting into beta. And we've seen tremendous impact of us. We're able to make better decisions as a result of knowing where things are. We shift the game from being reactive to proactive. Instead of finding out a shipment is not going to make it on time, we know it -- [indiscernible] the fact, we know about it right now, we can make a decision, maybe ship a new thing, maybe call customer, let them know. But either way, we're not now encumbered by barcode scans that are 12, 18 hours, maybe a week late in certain cases. So how do we do this? Well, obviously, it starts with the network that I just showed you. It starts with the visibility that comes from that Bluetooth network. So we're not now relying on barcode scans at a cross dock or loading dock. We know exactly where it is all the time, and that makes the difference. Then on top of that, we're able to layer our operational visibility. So that's the millions of cameras that are out there that are able to give us context, well, okay, I see where it is on a map, but where is it really? What's going on here? Why is that shipment stopped? And then we're really fortunate to be building this in the age of intelligence, as Sanjit mentioned. So we can do this with AI. Now we can make better decisions. We can take all that data that these shipments are generating, sift through it or allow the AI to sift through it on our behalf and make decisions. For example, how many warehouses do I need? Which carriers do I want to leverage out of which warehouse? Am I serving my customers appropriately? These kinds of decisions, which tremendous -- historically have been tremendously difficult to make. And so now we're able to do it in a matter of seconds.

So I'm going to flip over the laptop and show you kind of how this works. So this is a shipment that came here. We shipped it of our Louisville, Kentucky warehouse and it came to Las Vegas. You see the origin in Louisville, it's to destination is Vegas. That's great. It was delivered. So that's good to know. We're aware of that. We see the contents. It's got 1,000 of these labels in it. We've actually integrated this with our ERP in our warehouse management system. So one of the key investment areas in making this product is how do you make it frictionless and must be frictionless and our operations team really worked with us on this. So this is great. We can see where it is, where it started, where it ended up. But let's look at how it actually gets here. Let's just pause for a second. So that arrow, that is the Tracking Label. Now some context, we intentionally didn't ship this with the same Samsara customer. We want to see what the worst case would look like. So there's no dedicated network infrastructure on here. There's no Vehicle Gateways attached to this, providing this connectivity. This is that label on pallet, inside of a box truck, made out of metal, shooting Bluetooth out of the side, getting picked up by that network that I showed you. And that is why that network is so critical and so important. This is a product that anybody can talk about, but it's much harder to walk the walk. And our network allows us to walk the walk. Now these other gold dots here, these other little pink dots. That's the carrier update. So that is what traditional scanning looks like without a label. You see a scan at a barcode, or barcode scan at a cross doc or loading dock, you see arrived at facility, left facility. That's the visibility that our customers have today. You can appreciate why seeing real time might make a difference. So we'll finish this journey out. We'll see if it came all the way here and delivered. So what are we able to do with this? How do we actually think about this? Well, as I mentioned, we've been using this ourselves. So this is Samsara on Samsara. These are all the shipments going out to our customers right now. And we're not clicking on individual shipments here. We're not going to go individually inspect each one of these. We're going to manage by exception. And so we can do things like look at delayed shipments, and we can click on this one here. And we can see that this was supposed to be delivered a couple of days ago, and it's not yet been delivered. So okay. what do we do about this? Well, all of the AI that we've invested in, all the automation we invested in, this feeds right into it. So our ops team can trigger an agent or have an agent configured, automatically e-mail our customers. It can slack them and let them know, hey, you might need to make a new order for this customer because this is going to arriving late. Now there's another thing that those cameras out there can help us with. Sometimes shipments get stalled. We don't really know why. We don't really know where. And so as I mentioned, we can actually put eyeballs on these shipments. These photographs are very similar to the photos that Johan showed you and you've seen with StreetSense and Weather Intelligence. These are taken from other vehicles in the vicinity, in the vicinity of both time and space to where the shipment is. And earlier today, we investigated a shipment that was stalled, it was stuck. And we were able to see it was stuck in a gas station, slept there overnight. For us going to the gas station is a 15-minute affair. For a driver oftentimes they're parked overnight at a gas station. And then you wonder why this cargo theft. Well, if we see something is stalled, now we can say, "hey, you're not in a secure facility, move that trailer, don't stay at the cargo -- at the rest stop overnight with this precious cargo inside. So this is how Bluetooth and cameras can all start coming together with shipment visibility and provide better and richer context.

Now One of the other use cases for us has been actually making these operational decisions. So how do I actually now they've got the base layer of visibility, the camera layer of operational visibility. How do I leverage AI to make better decisions? Well, one of the questions that we like to answer and think about is how are we performing as an organization. Our customers are asking the same question. So you can imagine that on a quarterly or by quarterly basis, our operations team likes to think about how we do [indiscernible] a report card. We want to see if we're doing all right, we've appropriately balanced our inventory across these warehouses and if we're serving our customers appropriately. Now this type of analysis to ask how my warehouse are performing is really, really burdensome for people. You have to go get CSVs, you have to get G Sheets. You have to get third-party information. And even in the age of Claude and chatGPT, managing this is a pain because you have to go find the data. It's really difficult. It takes several days to put this kind of report together. Well, in a matter of seconds, the AI is able to put this together for us and it's able to benchmark how these warehouses are doing. And we can look at things like, yes, we are doing way more volume out of Kentucky. And that makes a lot of sense because most of our customers -- more densely populated areas on the East Coast. But we may want to reload or rebalance a load. So we have to go deeper and ask, which carriers are best on time, do we want to use different ones for different routes so we have the best possible service for our customers. So these are just a couple of ways we can go back to the slides that we're leveraging Tracking Labels internally and our customers are leveraging them to get ahead of issues.

So in closing, I think the really interesting and important part here is we're seeing an accelerate in the way we're able to develop these products. The products we ship, go out to customers to generate data, which enables us to brand-new products, just like with Asset Tag, just like the tank level monitoring and now, of course, just like Tracking Labels. So we're really excited about this. We're excited about the ROI that we think we're going to see out of this for our customers and the new customer expansion into shippers. And then I'm going to hand it back over to Amit.

Thanks, David. Good afternoon. My name is Amit Vyas and I'm the Chief Revenue Officer at Samsara. And today, I'm excited to talk to you about our go-to-market momentum. As you see here, we are seeing a lot of success selling into various industries. But what I find most impressive is that we are selling to the market leaders in these various industries, companies like Alaska Airlines, Hertz, even Ecolab, all have complex operations at scale and rely on Samsara to solve their problems. So what problems are we solving. When I'm out in the field, these are the 4 things I hear most often. First, rising cost, fuel cost, as Sanjit mentioned, insurance premiums. And these are essential for our customers. They cannot operate without them. So any chance they get to reduce these costs, they're going to take it.

Next is safety, not just for their employees, their assets and their equipment but also the general public. Our customers run critical operations and cannot afford any unexpected downtime. That will cost them millions of dollars in certain cases. So they're always looking for ways for preventive maintenance. All 3 of these things converge to basically an emerging need for digitization. For so long, these customers and physical operations have been ignored by tech and they are now with AI, as Sanjit mentioned, are really reaching out to say how do we go lean in and digitize our operations.

And we're able to show ROI relatively quickly. For example, SD saved $3 million in fuel costs, USC had a 98% reduction in insurance claims and Maxim Crane, saved $13 million on maintenance costs. So one question that I always get from investors is you are solving customer problems, you're showing ROI very quickly when they deploy, why do they choose to do a phased rollout. So to explain this, I'm going to walk you through the customer buying journey at Samsara. So we'll start with the rep qualifying the opportunity. They will do a demo of our dashboard, and then they'll pitch a free trial. Now the free trial is our most powerful sales tool. It allows the customer to try Samsara within their own organization and compare it to the competition. From there, they'll do an initial deployment. Now I used to sell IT, routing, switching. And when you're selling IT, you're just replacing the incumbent in a networking closet and you're able to sell the complete solution. We sell to physical operations. So you have bulldozers out in the field. You have cranes being used. You have vehicles transporting goods. And our customers choose not to stop their operations and install, they rather do a phased approach. To illustrate this point, I'd like to talk about a well-known home improvement company that bought some -- sorry, back in 2019, they bought -- they started with 2 products, safety and telematics. And as they started with a small deployment and then the following year, they bought safety and telematics, but they also bought a third product, Asset Gateways. Now over the next few years, they continue to buy more and then they bought a fourth product, Asset Tags. And then just this year, they bought a fifth product, Connected Workflows. Now when you think about this, my sales rep sold the initial deal. They're also getting to know the customer better, establishing the relationship, but understanding their complex operations better as well. So they can sell and provide solutions as they identify them over -- as they roll out. The other thing I want to point out is this shows how our enterprise customers buy. Look at the confidence. They come back. They do an initial purchase. It's small and then they continue rolling out, but they're adding other products, as they continue their Samsara journey.

I'm going to switch gears and now talk about 3 initiatives that I launched at the beginning of this year. We are seeing success in the enterprise. We are continuing to move upmarket and getting into global accounts. So now we have a global sales team that is dedicated in calling into these accounts. These are our most tenured reps. We also are seeing a lot of success with emerging products. So Johan mentioned, we're rolling out quite a few new products. I don't want to overwhelm the sales team, the main sales team. So we launched product specialists at the beginning of the year. This is a dedicated team with their own quota that sells specific products, co-sells with the main sales team. And this is working out really well. In fact, Q1, our emerging products was over 20% of net new ACV.

And lastly, I'm always looking for ways to increase efficiency of my sales reps. I want them to be able to spend time selling and not doing admin work. So we've launched a lot of homegrown AI tools so that it can automate things like follow-up e-mails, et cetera. I've been at Samsara for almost 10 years. And I have a habit that after every end of the quarter, I call a few select customers and ask them, how did my rep do? How is your buying experience? And tell me why you bought Samsara. And for the last 10 years, the first 5 have been consistent with the newer 1 being actionable AI insights. At the end of the day, I would say Samsara customers buy Samsara and it's working because we have the right people. I know exactly which profile rep to hire for each of my segments. We have the right product. Our product road map is built by customers with their feedback, solving their problems and it's the right time. As I mentioned, there's an emerging trend to really lean in to digitize their operations. This is why Samsara is winning in the market.

Thank you. And now we have a quick break for 10 minutes.

[Break]

All right. Let's get going here. So hey, [ Theo ] and Eric, like thank you so much for being here, like really appreciate it. Sitting down with customers, it's like some of the best things that I do. It's truly an honor to speak to true -- 2 true leaders in the industry. So thank you so much for that. Now you need quite complex operations as such, like I would love for if you could start off with us introducing yourself and maybe a little bit about your companies, maybe starting with you, Eric.

Sure. My name is Eric Amlee, Senior Vice President of Fleet for Primoris Services Corporation. We're a utility scale contractor. We do EPC projects from renewables, solar, power generation, heavy civil. We're basically scaled all over North America, roughly 24,000 pieces of equipment, 8,000 of those are rolling stock units with dual-facing cameras. And my role within the organization is a cradle-to-grave fleet management. So we're a centralized fleet model. Anything from business cases to repair and maintenance, procurement, disposition, all that rolls under my group.

My name is Tom Olitsky, referred to as TO here.

Sorry, it's just that everyone in the industry that knows him, like, that's TO.

TO. That's fine. That's just my initials, but that's -- I've been going by for about 10 years. With Performance Food Group out of Richmond, Virginia, we are a food service distributor, Fortune 100 company, serving over 300,000 locations, including chain, independent restaurants, schools, health care, hospitals. We do movie theaters. We do gas stations, convenience type of stores. So it's pretty much what we like to call the away -- North American food-away-from-home market, right?

Anything in the North American group that does food-away-from-home. We employ about 43,000 associates, over 150 locations with an annual revenue of over $60 billion. In my role as a VP of Safety, I'm responsible for the health and welfare of all of those associates, including protecting the motoring public from what our drivers are in, and those communities that we serve. On the transportation side, we have about 12,000 delivery associates and as many vehicles.

That's some incredible scale here, like you're really powering society here. It would be interesting to hear, like how are you using Samsara day-to-day? Maybe starting with you, Eric.

Yes. So we started using Samsara roughly in 2018. We've grown exponentially since then through acquisition. We currently have 8,000 dual-facing cameras, as I've stated before, so protecting our drivers and the public. We've also used a lot of -- we use yellow iron. So it's equipment that's powered through multiple OEMs. We use trailer tracking devices, asset trackers. And really, the challenge we run into every day is that we use dozens of OEMs and where do we put all that data? How do we aggregate that? Since that's where our partnership has really, really blossomed and developed.

Yes. TO, how are you using it?

We are a Samsara customer for the past 5 years. We did come from a competitor that we've had 10 years prior. So we've been in the camera safety business for a while. But I think that our journey with Samsara has taken us to a totally different level. Safety is paramount for our drivers and for the public that we serve. And we took the platform from going from reactive to proactive, with all of the data and information that you're able to provide on the safety side.

We also are a food company. So we have refrigerated and frozen foods. So we use environmental door monitors and temperature sensors because food safety is critical, and we have to be compliant with the FDA. So that helps us also in a different use case. Sometimes we run out of space in our buildings, and we use our trailers for storage, and they become an extension of our buildings. And Samsara helps us be able to monitor those because before, it was all manual. We just had, hey, some go out and check the refrigeration units every 4 hours, 24 hours a day for 6 months because we have 25,000 turkeys on them. Now, we're able to be able to do that remotely, and that helps us immensely.

And I know that in our industries, like outcomes is what truly matters. So can you maybe share a little bit about how does the ROI work? And what kind of ROI have you seen from using Samsara? Let's start with you, Eric.

Yes, sure. So we -- for years, we used just the GPS telematics and we track drivers through driver scorecards. And then we saw some pretty good impact. But really, the change was when we adopted dual-facing cameras. We ran through a pilot program, and we're a pretty robust company. So we have a lot of union, non-union companies. So working through the unions, getting agreements and proving the value to the employee, not using it as an oversight and like a big brother scenario. And really, we've seen a huge impact. I mean, roughly, we're down 66% in total events, 40% in severe speeding and 42% down in crashes overall with 8,000 units. So that's equating to today roughly $5 million a year in savings from crashes and claims. And really, it's unbelievable to have met the amount. And the adoption rate of that through our organization has been phenomenal.

Everyone, at first, is definitely afraid of it. They're like, oh, everyone is going to quit and leave. We didn't have one person quit and leave. Honestly, we've worked through it. Everyone complains they have some disorder that can't be recorded, and we work through it and explain to them like, it's actually a value to yourself, right? We don't record folks. So everyone thinks that it's being recorded, and we proved everyone. So we actually developed a one pager and showed them like, hey, here's our change management. Here's what we're trying to do, and here's also what we accomplished. And we shared some success stories, really, of allowing how we've been able to get drivers out of infractions because -- to prove that they weren't at fault from where an officer thought they were at fault for it. So when you share those success stories, the adoption rate becomes -- it's just easy. It's naturally you're done, right? And really, the indirect of it is we've reduced our idling by 30%. So with today's fuel cost, it's millions of dollars in savings. So it's been a very, very successful program for us.

TO, how are you experiencing ROI?

Well, as a safety leader, ensuring our people make it home every night is most important to me, obviously. But in the past 10 years, we've seen -- we're battling insurance inflation, catastrophic loss and claims, nuclear verdicts, all of that is a headwind for us. And it just continues to rise at an alarming pace. I would argue with anybody that the system pays for itself in just pure exonerations. From a financial group, I don't know if you count that as an ROI, right, something that didn't happen. But I can tell you, I could look at 10 videos in a year that would cost 3x as much as we're paying you guys just to have the system. So exonerations is important.

But other than that, we forecasted an increase in insurance costs this year for varied reasons, a lot of inflation of $20 million, we expect it to increase $20 million. Now, our fiscal year ends this week. We're a July to June fiscal. And as we finished the year, we realized that we only needed to spend $10 million of that. So that's a weird type of win, but planning for a $20 million loss, and only $10 million is very successful to us. But that doesn't happen easily. It's not luck, right? So it's our dash cam footage. Over the past 3 years, we've seen a 26% decrease in total event rates. 60% in collision risk, 70% traffic signals and signs all through the tech, 23% decrease in harsh rate reduction. One of my favorite, 90% decrease in speeding over 10 miles an hour, 90%. That's just grassroots coaching, which is great. 33% in seatbelt.

But the most important part is repeat behaviors, right? And we love that you give us a repeat behavior percentage. And that has improved by 67% in just the last 12 months. So bottom line is we're moving in the right direction. All the data that you give us helps us be better stewards of our drivers and helps us coach.

Yes. Those are some quite impressive numbers. This takes partnership. So I would love for you to explain -- share a little bit, what is it like to partner with Samsara? And maybe also, what is it to be a part of the broader community? Maybe starting with you this time, TO.

Okay. Yes, I cannot -- I get excited about the partnership. It is so fun to be a part of this -- I feel like I'm part of the company. And I've watched you grow over the past 5 years so greatly. But we came -- again, we came from another vendor for 10 years, and we were -- at that point, we were unheard, and we're a big company. But it became to the point where if you have a suggestion, it was, well, it's going to have to benefit everybody. I'm like, okay, well, it probably will. But then it would just fall flat and nothing would happen. You guys listen and you react.

And it is a community. I could call up anyone, even not in my industry, and talk about -- because everyone's -- road safety is the same for everybody. I don't care what you're delivering or installing or doing things. So it is a community, but we have chances to communicate it beyond. We're on the Customer Advisory Board, which is fantastic, peer-to-peer meetings. Some of my favorite is I sat down twice already with two potential customers in the morning and this afternoon just to talk about -- because they're on the fence.

What do I do? Should I go here? Should I do it? Should I not? How hard is it going to be? And I love sitting down with those customers and telling them, yes, you have to. It's -- you have to take care of the public. And some people will go into this thinking, I don't want all that data because I'm afraid what I might see. That's not the reason to not buy the system, right? Don't say that out loud again to me. You have to face what's out there and you have to coach and make it better, right? Everybody's families are on the road. It's important for everybody.

Yes. So maybe -- by the way, thank you so much for the partnership. Maybe on the topic of new products, Eric, for you, like looking at our road map, what are some of the newer products that you are most excited about?

Yes. I think the 360 camera for us is going to be something that we'll be able to use just to get that bird's eye view. Some of the manufacturers have something of that, but there's a lot of OEM partners that are way, way behind. So we need something that we can put in place today, the avoidance of person detection, object detection, just the amount of -- just in injuries and incidents alone, not just the cost of the unit getting damaged, but taking that unit out of service and disruption of operations and sometimes, they are very hard to measure, and that's really where it affects your margins and your profit margins. And it's all about utilization and getting those going.

And really, we're really after connected assets and using the maintenance program. So we're really ramping up all of our maintenance schedules, preventative maintenance and everything. So really, pushing that through one system. We have -- there's just so many we use today. Having to get fault codes from different systems and different manufacturers and having one place to go and being able to act on that in real time, it just -- that's really, really where we need to be and where we're going to ramp up for sure.

Yes. That's great. What are you excited, TO, about the road map?

I'm like a kid at Christmas. I mean there's just so much good stuff out there. I would agree with Eric that I think multicam is a game changer, having 360-degree visibility around truck and you're now going to have bird's eye [ view ], it amazes me that you can look down and around because we love to pull -- our businesses are in parking lots, right? That's where customers are. So we're pulling in and we're knocking down wires and hitting overhangs and gas stations and tree branches.

We're always looking ahead when no one is looking up, but you get that over, the view around the whole truck really makes you realize what you're about to get into [indiscernible]. So I love multicam and the birds eye. AI-powered ride-along is fantastic. We require our supervisors to go out at least once a year and do a ride with every single driver. Now, this kind of -- it will take us to a different level of, do we really have to go out with all 11,000 drivers? Or can we just go out with the 25% of the drivers that really need a little more TLC? Because everyone else could be monitored through the system, and we could look at that.

And then if you could go out with a ride-along if that trend comes back as a little bit rough. So powered, that's a great one. Two-way conversations is fantastic. We don't want phones in their hands. Phones are an addiction. They love to pick up the phone. I've asked some of our coaches, when you need to get hold of the driver, what do you do? Well, I call them on the phone. Exactly what we don't want to do, right? We tell them don't use the phone and you're calling them on the phone. So this now gives us an avenue to be able to talk to them or be able to talk to them if they have fatigue issues. There's just a lot of tech that's coming out that's really exciting.

Eric, you have started testing autonomous equipment a little bit. So I would love to hear like, how is that working? And also, how do you see Samsara fit into that?

Yes. It's been a challenge. We use a lot of it today based on excavators. So mounted on a CAT excavator, we can overlay a trench and say, dig this trench and it has obstacle avoidance on it. It's been a little bit of a challenge because it's not necessarily faster than an operator is today. The hope is to be able to scale that one operator can run five or six machines. A little bit of difficulties just with getting into the weeds, material sloughs off behind it. The machine doesn't necessarily know that. So I have to go back and clean an edge or if it hits a rock formation and what it has to do to get over that rock. So that's where the operator is a little bit more efficient, but the technology is definitely rapidly approaching.

Where it's very successful today is in our mining facilities. So it's going to load a truck, and then it's going to dump in the same location every time. So like a point-to-point, and that's a fixed location. Some of the industries will get challenged on is in utility structures -- or utility infrastructure, you don't really know what you're getting into until you get on site. So power poles, residential areas, if you have to get traffic control, delineation, things like that, that's where it's kind of a slow progression. But that's definitely the progression of that. And really, where I see Samsara is fitting into that is all this is being engineered by multiple OEMs, multiple third-party companies. And again, we're trying to not get multiple platforms and more platforms. We're trying to condense all that. And really, where I see Samsara is really fitting into that as being the single pane of glass for everything we're doing for maintenance, GPS utilization, AI platform and autonomous platform all being housed in one location.

Yes, that makes sense. Have you started testing any of this, TO, in autonomous vehicles?

It's an interesting conversation for our industry. And I've been in food service distribution for over 40 years. And we're doing exactly today what we did 40 years ago. We are going from point A to point B with 800 cases on a truck, that we have to touch every single case to go to 20 different customers, up and down a ramp. So it's a very -- it's a human operation. And so we have not tested it yet because if we do -- now I fully, especially from a safety perspective, believe in the technology. It's safer.

If everything was autonomous, we wouldn't have accidents because accidents are caused by humans. It's not because of a failure of a vehicle. So we need someone to offload. So I would have a driver sitting next to an autonomous vehicle and then they get to every stop and offload. So we're not saving labor. And the cost is probably 50% more of a regular vehicle. And I'm worried about the infrastructure. So we're cautiously optimistic about it moving quick. But again, we'll always have the labor side in front of us that we're going to face.

Yes. And how would you see Samsara fitting into that when it eventually comes?

You have to build those robots, that's for sure, that are going to offload those trucks. Okay. I don't know what else to do. But no, yes. I know you will find a way. We will work together to figure it out.

It's good. And on the subject of AI, TO, so you've been early adopters of our agents. So I'm curious to see, what are you seeing there?

Drowsy detection. So that's been one of my favorites and one of the things that keeps me up at night. When you see videos of people starting to fall asleep at the wheel going 60 miles an hour, it scares you to death. So now we get alerts, right? We get alerts back at the shop, we get alerts in the truck. Depending on the type of event, if it's egregious enough. We might pull a driver off the road.

When we first started getting the drowsy events from Samsara, what we did is we probably had six drivers we pulled off the road and send them for a fitness test to see if they have obstructive sleep apnea, which tons of people do. And all six came back with obstructive sleep apnea. And all six went on a machine to help them breathe better, and none of them had a distracted event in drowsy again since that. So it's really about the health of the driver, which is fantastic. So I think it's very powerful.

That's cool. And Eric, switching gears here a little bit. I think you've been testing out the asset tags, specifically when it comes to theft and loss. What have you seen there? And what are some stories? Do you think they recovered or...

Yes, definitely. So in the construction industry, a lot of our stuff is parked at a hotel at night, someone's house. It could be a job site that's not secured. It's on the side of a highway, city street. So we do, unfortunately, see a lot of theft, specifically in small tools, whether it's a jackhammer, a saw, and we've been able to put small asset trackers on all of those devices. And in addition to our mini excavators, backhoes, things like that, they are also getting stolen as a redundant device. So we put an earth magnet on that AT11, just put on the machine, whether it's a rental or not, and it's allowed us to recover multiple devices. So for us, recovering one mini excavator or backhoe pays for almost the entire program as a whole to be able to afford us the opportunity to invest in more AT11s, AT12, AT13.

So just last week, we had three separate incidents where trucks were broken into. They stole some partner saws and small hand tools, and we're able to recover all of them. And two of the thefts that were separate were actually recovered at the same site. So it tells you that most of these aren't just random people in the neighborhoods doing things. These are professional rings that are going around. Not necessarily professionals, I wouldn't call them pros by any means. But that's definitely a group of people. And we're rapidly expanding that, especially with the new devices we're coming out and testing. And we've been an early adopter and an early tester of that, and it's -- we bear a lot of fruit with it.

That's great. Hey, I want to thank you so much for a great conversation. And more importantly, thank you so much for your partnership. Thank you so much.

Thank you.

Yes. Thank you. Appreciate it.

Right. I think that's over to you, Dom.

Great. Thank you, and welcome to Investor Day. I'm Dominic Phillips, Samsara's CFO. I have about 20 minutes of content talking about durable and profitable growth, and then we'll bring everyone back up on stage, and we'll do a Q&A for about 30 minutes before wrapping for the afternoon. So before I get into the reasons why we think our growth can be durable and profitable going forward, I first just want to level set with where things stand today. So we had our Q1 earnings call a few weeks ago. And on it, we announced we're doing roughly $2 billion of ARR growing 30% year-over-year. And you can see on this chart that as we've scaled our ARR over the last couple of years, we've really been able to stabilize and level off our overall ARR growth rate at roughly 30%.

And the reason we've been able to maintain this high level of growth as we've scaled is because over the last several quarters, we've been accelerating our net new ARR growth. So this is a look at our net new ARR growth by quarter compared to the same period in the prior year. And you can see that for the last three quarters, net new ARR growth has accelerated compared to last year. And even over on the right-hand side, for the full fiscal year, FY '25 net new ARR growth was 16%, and then we accelerated it to 21% in FY '26. And the big reasons we've been able to drive this growth, first, emerging products. For the last two quarters, emerging product net new ACV has contributed more than 20% of the overall net new ACV.

The second is large customers continue to be our fastest growing. So 62% of our ARR comes from our 100,000-plus customers. That's up from 58% a year ago. And then within that, our $1 million-plus ARR customers now contribute roughly 1/4 of our overall ARR. And the ARR from both of those customer cohorts has now accelerated sequentially for several quarters in a row. And the last reason is international momentum. So in Q1, 18% of our net new ACV came from non-U.S. geographies. That was tied for a quarterly record. So all the emerging products, large customers, international, driving accelerating net new ARR growth, which has allowed us to stabilize our overall ARR growth.

And in addition to sustaining high growth as we've scaled the business, we've also delivered a lot of operating leverage. So on the left-hand side, over the last 2 years, free cash flow margins have improved by 15 percentage points. And on the right-hand side, we've now achieved GAAP EPS. We've been GAAP EPS positive, profitable for the last three quarters and cumulatively, over the last four quarters, which now makes us eligible for some of the larger stock indices like the S&P 500. And this combination of large scale and fast growth and profitability really put us in rarefied air. There are roughly 300 U.S.-listed software companies, of which roughly 60 are doing $2 billion or more of ARR. And then of those roughly 60, there's only three that are still growing north of 30% and are GAAP profitable, Samsara, Palantir and Datadog.

Okay. So that's a quick snapshot of where things stand today and what we've accomplished over the last couple of years. We think that this growth rate can continue to be durable for several key reasons. The first is that we're selling into really large end markets that are growing quickly. The second is that our products address a really large TAM, and we still have a lot of white space opportunity in our core products and in our core geography. The third is that we are really purpose-built for large enterprise customers with complex physical operations, and that continues to be our fastest-growing customer cohort. Fourth, multiproduct adoption is increasing as we add more emerging products into our portfolio.

And then lastly, we have this really nice balance of net new ACV contribution coming from landing new customers as well as driving expansions into our existing customers, and we think that we can maintain that to drive durable growth. So double-clicking on each of those points in a little bit more detail. Again, the first is that we're selling into the world of physical operations, which is massive. These end markets make up more than 40% of global GDP, and they span more than a dozen different end markets. And because our value proposition to customers is universal, we're helping them improve their safety, their efficiency and their sustainability, our ARR across the physical operations end markets is very diversified.

On the right-hand side, this is a look at our ARR broken down by each of the end markets that we're selling into. And you can see there's not one industry that makes up more than 20% of our overall ARR. You have construction at 19%, transportation at 17%, wholesale and retail at 16% and field services at 13%. And beyond those top 4, there's another half dozen end markets that represent between 5% to 10% of our overall ARR. Not only are these end markets very large, but they're also growing very quickly. Over the last 10 years, U.S. GDP has grown 31%. And each of the physical operations end markets is growing faster than that, both individually, which is represented by each of the dotted lines on this chart, as well as in aggregate, which is represented by the black line.

And you can see that overall, physical operations is growing at a rate that is more than 2x U.S. GDP over the last 10 years. And the companies in these industries require a lot of heavy assets and frontline labor to get their work done, which means they have very large operations budgets, which are not -- which are less discretionary. We took a look at our top 10 public customers and found that they spend roughly 80% of their revenue on their operations budget. That includes all of their frontline labor, their assets, their vehicles, their equipment, all of their maintenance, their fuel, their accident costs, their insurance premiums, all of those costs are encompassed in the operations budget. And then they spend only 11% of their revenue on things like their IT budget and other SG&A-related activities.

Because the operations budget is so large, it means that we have a big opportunity to have a lot of customer impact and ultimately drive a lot of ROI for our customers, which you just heard from the customer panel. And because these industries are so asset and labor-intensive, they're also more AI resilient. This is a spider chart that Anthropic put out a few months ago. And around the chart, you see a bunch of different industries. And the ones highlighted in green are the physical operations end market. So you see transportation and installation and repair, construction, agriculture, those are all the industries that we're selling into.

And the way this chart works is where they have highlighted in light blue, those are the industries that they think are the most likely to be disrupted by AI. And you see a lot of light blue shading tied to industries like business and finance and computer and math and legal. And you don't see very much, if any, light blue shading on the physical operations end markets in green. So again, world of physical operations, it's massive. These industries are growing very quickly. Within these industries, we're selling into the operations budget, which is very large and less discretionary, and these end markets are more AI resilient. Second durable growth point is that our products address a really large TAM. Top-down external research estimates that our products address a market opportunity that's $175 billion. Within that, our core products address a $45 billion market. That's our telematics, our AI dash cameras and our powered asset gateways.

And beyond our core products, we have a $130 billion TAM for all of our emerging products that we've announced over the last 2 to 2.5 years, including everything that you've heard about today. Not only do our products address a very large TAM, but our penetration in our core products and in our core geography are really still in the early innings. On the left side of this chart is the North America telematics market that has been around for a few decades. Of the more than 35 million commercial vehicles in North America, only about 50% of them are connected today or using some sort of telematics solution. And that's fragmented across more than 35 different vendors, which means that the other 50% of commercial vehicles are still not yet connected. They have not gone through the Phase 1 transition that Sanjit talked about earlier.

On the right-hand side, the North America AI dash camera market is only 15% penetrated across 10 vendors. And the other 85% of commercial vehicles are still not using an AI dash camera today. So while things like our emerging products and international, those are going to be really important drivers of durable growth, we still have a lot of growth opportunity in just our core products and in our core geography. Next durable growth point is that large customers continue to be our fastest growing. We now have 190 customers that pay more than $1 million of ARR. Those customers represent roughly 1/4 of our overall ARR or just under $500 million. And the ARR from the $1 million-plus customers has now accelerated sequentially for four consecutive quarters.

Not only are our largest customers our fastest growing, but our enterprise customers continue to get larger over time. On the left side here, today, our 10th largest customer is paying $6.6 million of ARR. That's up 4.4x from 5 years ago when our 10th largest customer was paying $1.5 million of ARR. And you can see it's up almost 1.5x in just the last year. You can see that really large step-up from FY '25 to FY '26. In the middle, our 25th largest customer today is paying $4.2 million of ARR. That's up 5.3x over the last 5 years. And on the right-hand side, our 100th largest customer today is paying $1.5 million of ARR, which is the same size that our 10th largest customer was just 5 years ago.

The next durable growth point is that multiproduct adoption is increasing as we're adding more emerging products into our portfolio. On the left, 96% of our large customers and 92% of our core customers subscribe to two or more products. And that has increased slightly over the last couple of years, but we've effectively reached full saturation. Most of our customers at this point are using at least two products on the Samsara platform. In the middle, 70% of large customers and 55% of core customers subscribe to three or more products, and that continues to increase over the last couple of years.

And on the right-hand side, 20% of large customers and 10% of core subscribe to four or more products, which is roughly 2x higher than it was just 2 years ago. And the increase in multiproduct adoption is really being driven by all of these emerging products that we've announced over the last couple of years. So outside of our core three products, telematics, AI dash cameras and powered asset gateways, we've launched another 12 emerging products or product families or categories over the last couple of years, including everything today. These emerging products are now approaching roughly $150 million of ARR.

And as I said earlier, emerging product net new ACV contribution was more than 20% for the last two quarters. And the final durable growth point is that we have this really nice balance of net new ACV contribution coming from landing new logos as well as driving expansions through our existing customers. As you can see on this chart, very consistently over the last three fiscal years, roughly 40% of our net new ACV has come from new logos and the remaining 60% has come from expansions. Within expansions, more of it has come from upsells or license increases.

But you can see in FY '26, cross-sells, the light blue, is picking up as we've rolled out more of these emerging products. Double-clicking on new logos, we still have a lot of opportunity to continue to land more new logos over time. When we look at our CRM, we've identified more than 200,000 core customers that would pay more than $25,000 of ARR. Today, we have roughly 13,000 of them or 6% customer penetration. And even recently, new logos continues to drive a lot of our net new ACV. If I look at just the last three quarters, all three of those quarters are in the top 5 of most new core customers ever added in a given quarter.

We also have a significant opportunity on the expansion side with our existing customers. So if we took all of our existing customers and all of the ARR that they pay us today as 1x, and we were to go wall-to-wall across all of our core products, we were to monetize all of their commercial vehicles with AI dash cameras and telematics, and we were to monetize all of their powered equipment with gateways, and went wall-to-wall across all of the emerging products that we've rolled out, we estimate that the uplift would be more than 8x. And even just within our two core vehicle-based applications, the telematics and AI dash cameras, we estimate that today, we're only roughly 35% saturated in terms of the commercial vehicles that we've monetized within our customers.

And we've seen very consistent expansion within our customers over time. This is a table of our top 20 customers by ARR. And in each row, the light blue rectangle represents the quarter in which these customers first landed with Samsara and the subsequent dark blue rectangles represent each quarter that these customers did an expansion with us, whether that was an upsell or a cross-sell. And you can see how consistent these expansions are over time, even to the customers that have been on the platform for the better part of 5 or 6 years. All 20 of our top 20 customers have contributed some amount of net new ACV over the last four quarters. So this consistency gives us a lot of confidence that expansions are going to continue to drive durable growth for us.

Okay. Those are all the reasons that we think the growth rates can continue to be durable as we scale. We also think we can operate more profitably over time for a couple of reasons. The first, we've demonstrated significant operating leverage as we scale the business, and we think we can continue to do that, most notably in operating expenses. And then secondly, we are hyper focused on managing SBC as a percentage of revenue. So on that first point, we've demonstrated a lot of leverage as we scale the business. On the left, operating margins have improved by 17 percentage points just over the last 2 years.

Again, free cash flow margins have improved by 15 percentage points over the last 2 years, and GAAP EPS has improved by $0.52, and we are now GAAP profitable for three quarters in a row. All of that leverage has really come across all of the functions on the P&L. As I look forward, I don't expect as much near- to medium-term leverage in areas like COGS and in R&D as we have a very ambitious product road map, and we're investing in things like AI and hardware to drive durable growth. But I do expect more near- to medium-term leverage to come from areas like sales and marketing and G&A as we improve productivity and we benefit from a lower cost of sale on a renewed dollar of revenue compared to when we first landed that dollar of revenue.

We're also very focused on continuing to manage SBC leverage as we scale the business. Our biggest expense by far as a company is headcount, and that gets translated into compensation, which can be bifurcated into cash and equity. As we've scaled and started to generate more cash, we've made a number of structural changes to our equity program. So the mix of cash versus equity that we give as part of compensation and the level of employee which participates in the equity program. Our overall headcount hiring plan, who we're hiring and where we're hiring and what are the equity implications of that. And then the vesting length of the equity grants that we're giving out.

And all of those structural changes to the equity program have resulted in a lot of SBC leverage over the last few years. So in FY '24, SBC as a percentage of revenue was 25%. FY '25, we lowered it to 22%. Last year, we got it down to 20%. And this year, we're on track to hit 18%. We really manage equity, and SBC is a real cost of the business, and we expect these metrics will continue to improve as we scale.

Okay. So last slide from me, really just summarizing everything that we've talked about. We think the growth rates can continue to be durable and profitable as we scale, again, because we're selling into really large end markets that are growing quickly. Our products address a really large TAM, but we still have a lot of white space opportunity just in core products and in our core geography. Large customers continue to be our fastest growing, and we think that will sustain. Multiproduct adoption is only increasing as we layer in more of these emerging products into the portfolio. And we think that we can maintain this really nice balance of landing new logos and expanding our existing customers. And underpinning all of those durable growth points is the ability to continue to drive more operating leverage as we scale the business.

So with that, I'll welcome everyone back up on stage, and we'll get into Q&A.

All right. Thank you, everyone. So now we'll move over to the Q&A session. And just to keep the schedule, I'm going to prioritize the sell-side analyst first, and then we'll kind of go from there. So let's start here with Michael Turrin from Wells Fargo.

Thanks, Mike. Appreciate that, and thank you all for the time. It was a really good informative day of material. I guess I want to focus on, first of all, the tracking label seems like a bit of a no-brainer. And so what I'm curious about is we can't see your road map for emerging products and your ability to replenish those and continue to add to the durable growth profile. So I'd love to spend a bit more time on discovery. How much of it comes from unlocking new verticals, finding things like the cargo theft ROI case? And then how should we think about where the budget comes from when you're presenting these new products to customers and we're kind of gathering all of that input.

Sure. So I'll start, and David, if you want to add anything. At Samsara, we run customer feedback loops all the time. So events like this are great. We spend a lot of time out in the field, and that's where we hear about those operational challenges. Cargo theft is an interesting one, in that it's not something that a lot of companies report on, but it is epidemic proportions, like it's happening all over the place. So as we spend time on site, you'll hear, hey, we had an entire trailer stolen. We had a whole load stolen and that kind of thing.

And that's where products like AT11, which is the asset tag that we introduced a few years ago, came from. As we introduce those products, that really catalyzes the discussion for things like the tracking label, right? I don't think we would have gone straight to the tracking label, and customers wouldn't have even thought to ask us for it. But once you show them the tag, they say, this is great, can you make it smaller, right? That same thing is happening on the safety front as we think about the ride-along, like that's a whole new concept. I don't know anyone else in the industry that offers it.

But once we started deploying AI after the edge, once we started talking about looking at the entire drive, the whole driving experience, that's where the conversation organically led us to, you know what, we spent a lot of time and money and effort on ride-along. So we think that this kind of concentric circles approach is the way to go. And if you think about it, the perimeter is just growing and growing. So we don't have any shortage of ideas. But we're always thinking about timing, sequencing, applicability, like which industries is this going to affect. So we've got lots more ideas, I guess, is the short answer.

Great. Next is Alex with Wolfe.

Thanks for a wonderful session. Maybe I'll -- I appreciate the high-level takes from the financial portion. If I push one layer deeper on particularly the shipping label product, which seems like it's getting a lot of excitement, both on the floor and the room. Maybe just at a high level, talk about pricing and TAM. I mean I asked Claude what the TAM could be, and it estimates somewhere in the $30 billion to $50 billion.

And then I look at the TAM slide, and I actually think the TAM this year was less than the TAM last year. So help us understand a little bit of how to think about that. And then given some of the products are now graduating into this consumption motion as you're -- the power of the platform underneath, how does that layer in and factor into the financial profile of the company?

Maybe start with David just on some the tracking label stuff.

Sure. I mean it's early days with the tracking label. We think the market is, obviously, big. And for us, one of the exciting things is that we have customers today that can adopt the product and make use of it right now, and that's what they're doing. But there's also all these other organizations out there that we wouldn't necessarily talk to today. We kind of talked about NVIDIA and some of these other folks. And we think there's going to be broad applicability there. So we're excited to see what the TAM expansion looks like.

And then I think the additional exciting thing is that expanding perimeters as Sanjit just talked about, we get to talk to new customers, that we get to get new ideas and kind of see how the technology tailwinds meet them.

Do you want to cover pricing a little bit, too. I think he had ask a question. So how does consumption pricing work?

Yes. So it is a consumption-based model. Customers commit to buying a certain number of labels a year for the next few years. List price on the label is, per shipment, is $15 per shipment. And then it's enterprise-based discounting like everything else we do.

Okay. Kirk?

Kirk Materne of Evercore. I had a question on sort of on the agentic automation layer, and two, for you all. One, does that compress the phases, meaning as someone starts thinking about AI, do they -- they essentially still need the data. So does that help compress sort of the phasing of -- it might not compress the rollout, but assuming the buying decisions might get faster together? And then secondly, from a go-to-market perspective, when you think about waste intelligence and things like that, those are becoming a much more verticalized offerings.

And is it sort of a natural gravitation for you all to think about more verticalized sales overlay to go after those specific sort of opportunities, whether it's waste intelligence or potholes or actually, you're just selling into government? So just kind of curious about the compression and then sort of the go-to-market around that.

So the phases are really interesting to think about because the kind of initial rollout at Phase 1 ends up often being the bottleneck. Amit talked a little bit about the adoption journey that our customers go on. They're not going to be able to take their whole operation offline. So they have to do it in pieces. They might have 40,000 employees, like you heard from Tom. And so how are we going to get this out there is a real big challenge. So I do think once they get through that hurdle, the Phase 2 part happens pretty quickly. And then Phase 3 is brand new. We just started talking about agents today really on mainstage.

So I'll let you know how it goes. But we think that it will be faster because once you get through that initial adoption hurdle or hump, now you've got the data. That's this huge, huge unlock. And frankly, that is where the most anxiety is, which is we're going to have to deploy and touch 40,000 pieces of equipment, retrain 12,000 drivers, introduce this into the system. So we are very thoughtful about that with our customers. And then do you want to talk a little bit about verticalization and some of the other operational AI?

Yes.

No. I think the question was more around like how we sell...

From a sales perspective, the only verticalization we've done is with public sector, and we're continuing to monitor and eventually at scale, we will explore it.

Okay. Jason?

Jason Celino with KeyBanc Capital Markets. Congrats on the shipping label. It sounds like a great product, but I'll ask a different question. So the -- I found it interesting, the new go-to-market team on the emerging product upsell. Coincidentally or not coincidentally, we've seen kind of the emerging bucket, and net new ARR, also, kind of uptick. How big is that sales organization today? And is that something that could be getting bigger? Are you putting more resources behind it?

So we started this product specialist beginning of the year in Q1. So it's relatively new, and we're seeing early signs of success, but it's something I'm consistently monitoring to see how we continue to invest and at what time as we release future products. And I'd also imagine that certain products will graduate from that.

Andrew?

Andrew DeGasperi from BNP Paribas. Just wanted to ask a question in terms of changes in the regulatory environment. I mean last month was the Supreme Court decision. I think earlier this month, you had the executive order in terms of extending some of the enforcement beyond the freight brokers to also warehouse operators. So I just wanted to understand if maybe this -- have you been hearing more activity from these other customers versus last month? Could this be an incremental opportunity for you in terms of extending your product within these customers?

Maybe Sanjit, do you want to take that one?

Yes, sure. So I think in general, there was already awareness, especially among enterprise customers, that they need to invest in safety because if you heard this term nuclear verdict, these basically are payouts that involve $30 million, $40 million or $50 million kind of payouts when there's these accidents. So that was already sort of out there. A lot of these more recent decisions relate to third parties. So if you're contracting with -- if you're a freight brokerage or you're contracting with a subcontractor, does the risk sort of extend to them? This is all kind of new area.

But I would say, in general, a lot of these prospects are already coming to the table to invest in safety, so the awareness is there. So it hasn't felt like a step change. I don't know, Amit, if you sense anything different among the enterprise customers. But again, the awareness is very high. And then the question is, again, going back to change management, how do we introduce cameras and how do we introduce safety programs at scale into these large frontline workforces?

Chris?

Chris Quintero from Morgan Stanley. I wanted to ask about the infrastructure you've built around the models for your AI intelligence and agents. Are you doing multimodal kind of routing, deterministic elements, probabilistic elements? And it seems like voice is going to be a big way of how your customers are going to interact with your AI and software. So curious kind of how you're thinking about that angle, too. I know you have the investment in HappyRobot. So curious if that's it or you're looking to build something else there?

Yes. I can start.

The three nerds are excited.

Yes. Obviously, yes. So there's a set of things here to our stack that's important to remember. Like many and most of our models run on edge. It's an important element. Those we train ourselves, they're small models, they're efficient, they can run there. It's a key element when it comes to cost as well because that means that we can detect on edge, and we don't have to upload data and whatnot. It scales in a much better way. So that's the first thing to remember. But then we have models that also run in the back end. And there, we use everything, like we train our own models, deterministic, non-deterministic, fine-tune them and whatnot. So like -- and we do tap into all the new models from all the labs as well, including the open source.

Yes. And Chris, you asked about voice. So that's a modality we're excited about. But to the broader point, we are excited about multimodal data in general, right? So images, voice, GPS waypoints, all of these different things coming together. And sometimes different models perform differently, right? And so what's great is there's a diversity of models out there.

To Johan's point, we're fine-tuning, but we're also reevaluating constantly because the landscape is changing so fast. So we tend not to be wedded to a single model. We have routers and we can try different things. We're running evals constantly. And I think by the end of the year, we might shift our model mix, again, based on what's right for the job that our customers trying to run.

Matt?

I wanted to ask a question about agents. Sanjit, you had an interesting slide up there about the ROI potential of the maintenance agent. When you read the IDC study about the core product ROI, there's a lot of really tangible sources of ROI, whether it's insurance premium reduction, fuel savings. How do you think about presenting the ROI of agents to customers? And what are the components we should be thinking about?

Yes. Well, with agents, the key is task automation, right? So you can think of it as -- for ride-along, for example, traditionally, you'd have to put someone in the cab with the driver, you're double paying, right? You've got the driver and the other person. So you can start quantifying what is the value of that and then how many ride-along do they do and what's the savings. Similarly, for warranty claims, you might say, well, what was your claims rate before? How much warranty recovery you're getting, that's where your ROI is going to come from.

So I think it actually is going to vary agent by agent in terms of use case and also, kind of customer by customer, like what's the kind of frequency of use and so on. We're very optimistic there because we know that there's a lot of task automation opportunity here. Many of our customers, they just say, hey, we are bottlenecked right now. We don't have enough labor to do this. And so we are leaving warranty dollars on the floor or on the table, knowing that if we fill out all the paperwork, we'd get more, but we just don't have time right now. So I think we will be able to quantify more as we roll these out at scale, but we know the opportunity is there.

Let's go with Dan.

Dan Jester, Bank of Montreal. So I really appreciate the update on the network density and the ability to use that to build new products. As you think about growing internationally, that's been a place of focus recently. Has the ability to drive density in new international markets, has that sort of changed your thought process about entering new markets? Maybe to ask it a different way, if you're launching all these new products, do you need to expand in new markets with the same urgency that you would have had maybe a few years ago?

I'm happy to start. So we have been focused very deliberately on a couple of the core geographic markets. So in North America and Western Europe, this is where the majority of the physical operations TAM and value lies. And I think we've achieved some really significant network density. David, you had the slides on the network map. You look in Mexico, you look in the U.K., we're there. So we feel really good about that. And that means that we can introduce products like the tracking label into those markets as well.

Over time, we're probably going to expand with our customers into some additional geographies and the density in the network will grow organically there. But right now, we're not bottlenecked on market opportunity by any means.

Let's go with Dylan.

I appreciate everything today. Maybe a dual question for Johan and Amit. It was kind of focused on the product innovation question as well, too. But I think it's interesting with Waste Intelligence and maybe tracking to some extent as well, too, but how you can start to compound that ROI with a revenue-generative kind of value proposition, I guess. Is that a fair characterization? And how do you think about kind of the existing capabilities, but also future capabilities to expand the revenue side of the equation? For Johan.

And then, Amit, as you sell that, right, you have more vectors, more surface area and kind of explaining that ROI across departments, how that helps as you kind of move up into executive level conversations as well?

Yes, I can start off. So first of all, like it's still early days. I can say these are definitive answers, but in both, this example of potholes and waste, we have [ $7-figure ] deals in the pipeline there. And the revenue generation component of it is a part of the story with the customer. So there's certainly something new here because most of what we've done to date has been cost avoidance.

David, maybe talk about revenue generation for tracking labels to that.

Yes, sure. So we partnered with early carriers and DCL is on stage with us today, and they're now operating and offering that label to some of their customers, and they certainly view it as a revenue-generating opportunity. This is an upsell that they can provide a preferred customer experience and monetize it. And so I think, again, early days, but certainly seeing signal and appetite for it.

And then Amit, do you want to cover the go-to market?

Sure. From a go-to-market perspective, we love new products, right? I mean it just makes it so much wider. It makes it stickier with the customer. If you remember that graph I showed you, they buy initial, whatever it is, right, whichever product, safety, telematics, and then they continue to purchase, but now my sales team can talk about all these other products, and it just makes it stickier, and we're able to go wide into accounts.

Alex?

Maybe for you, Amit. This is Alex Sklar with Raymond James. Just following up on that go-to-market. So product breadth as a demand driver, just talk about how that's impacted win rates as the product breadth has really increased over the last 3 years for your core products in that initial land standpoint?

Sure. So we are continuing to see great growth with our core products. And this emerging products, it is helping us just continue, as I mentioned, over 20% of net new ACV in Q1 came from emerging products. The specialists are just able to go in and co-sell really well because they have certain knowledge on that product and can sell it. And then after -- over time, we'll see these graduate, and then there'll be new products that we'll assign specialists to if needed.

Alexei?

[indiscernible] from Alexei's team at JPMorgan. So given the impressive scaling in data points that you've collected and just comparing that figure that you disclosed year-over-year, which specific products or perhaps customer adoption behaviors do you most credit with helping you accelerate that scale? And as you think about that moat going forward, what do you see as the most pivotal method of continuing to scale that data capture going forward?

Let's just start with Sanjit.

You've seen that kind of acceleration in that chart. As we deploy our products, we often come up with creative new ideas for data capture. When we first released the cameras, we weren't taking pictures of garbage bins. But now, we see that there's a lot of value there. The same thing with potholes. So the cameras have now become a general purpose sensor for us. Same thing with diagnostics. Initially, we were just looking at fault codes. We're looking at things like miles per gallon and fuel consumption. Now, we're looking at engine performance.

So oftentimes, what we find is there's a data opportunity, and there's a question of do we want to gather it, move it into the cloud and so on. When we start to sense there's value in that data, we bring it in. And so that's where a lot of that compounding is coming from. It's multimodal, it's video. It's now going to be voice. It's workflows. We have hundreds of millions of workflows that people are running through our system.

And now, it's also data integration. Think about work orders and maintenance kind of work and costing. So a lot of this, again, comes back to the product development philosophy of concentric circles. And what tends to happen is the data follows those ideas. We say, wow, this is a really interesting idea. Let's start gathering the data, and that's what's driving some of that compounding.

Mark?

Mark Schappel with Loop Capital. Sanjit, I wonder if you could just give us an update of your view of the competitive environment and also whether you're seeing some of the platform companies kind of move into industrial operations.

I would say, generally speaking, the competitive set has been consistent with who we've seen in the market for many years. It's the same names, and you should feel free to chime in. And by the way, in different geographies, we'll see different names because they're more regional players. What we've seen though is our differentiation is this platform play. You've seen the multiproduct attach. I think we've done a great job simplifying the operation for the customer. That's playing really well.

And then I think your other question is around the larger platform players. I'm guessing you're referring to Googles and Amazons and so on. Yes. They definitely have a footprint among our customers. They might have Azure for VI software or for ERP or something like that. What we're doing is the kind of hardware, software cloud combination that's quite unique and not something that those players tend to offer. So I would say it's very rare for us to compete against them in a deal.

Any other questions? Sure. Okay.

This is great. I'm just curious how you think about the long-term risk from AVs because you talked in the keynote about robots and others, but one of the automations that are likely to come into a core of your customer base would be autonomous vehicles. How do you think about fitting into that world?

Yes. So AVs are something we've been excited about for a few years, and we're headquartered in San Francisco, which is like where all the AVs seem to be born, right? Like you see them all over the street. So for us, it's really been about expanding the opportunity. We see a way that if you think back to what our customers have talked about on stage, many of them have aspects of their operation where they may be labor or even driver limited. So AVs present an opportunity to move some of that freight from point A to point B.

And so we view it as an and. They're going to want to see it in their operations. We also think there are going to be many different types of AVs. Eric talked a little bit about how they have autonomous diggers and material movers and things like that. Those tend to come from different OEMs. And he also mentioned how looking for a single pane of glass to orchestrate his operations. So we think that's going to be fundamental as well as connecting all the workflows together, driving automation using agents, making decisions and then maybe dispatching AV or dispatching a person or some combination. So that's the opportunity we see.

And it's still, I have to say, very early days on the AV front. Most of our customers have been experimenting a little bit with it, and the counts are still in the thousands. Eventually, it will get to tens, hundreds of thousands, but there's 90 million commercial vehicles in operation between North America and Western Europe. So that's why we see it as an and for many, many years.

[indiscernible]?

Not AV related as much because if you kind of think about more connected devices as in vehicles, whether it's through -- I mean, right now, it's mainly Bluetooth, right, like in terms of what a lot has work on. But if you have direct-to-device connectivity through LEOs and other things over the next few years. Does that open up a surface area for you guys to have sort of more products and capabilities?

Do you want to talk a little bit about Hubble?

Sure. Yes. So we're early investors in Hubble, start-up company that's working on the possibility of Bluetooth to space, Bluetooth in air quotes. And we're excited about what that could open up for our customers and what that can mean for visibility. It means that over the ocean is all of a sudden a possibility. It could be that things get tracked everywhere. It's really early days on it. We're, I think, probably first people experimenting with the certain technology and seeing water can even run through the pipes. We'll see what happens. We're excited about the concept.

Yes. And then expanding that concept, there are a number of new constellations coming up. I think the promise is there, that we will be able to connect directly to the device. Many of our customers operate in really remote areas. They're literally building the roadways or the energy pipelines. So we know there's interest in operational visibility, connectivity and eventually, things like video. Technologies like Hubble would provide us like basic location, things like that. Eventually, we'd love to be able to get streaming video for operational AI and intelligence. So I do think that, that will expand the market opportunity, but we are kind of behind the connectivity coming online.

Alex?

Now it's round 2, so we can get a little spicier here. The other two companies you put on that slide of size, scale and growth, Palantir and Datadog, they have customers that pay them multiple times what some of your largest customers are paying them. Again, given whether it's the shift towards consumption, whether it's the fact that 8x, if you sold everything to everyone at all attached that you can realize in your customer base.

I guess maybe, Sanjit, for you, as you think about the density of absorption within your largest accounts, where you go from 5 million to 10 million to 20 million to 30 million to 40 million, like what does that look like? What has to happen to unlock that opportunity that allows you to kind of take advantage of this much larger pie?

I think Dominic had a really interesting slide that showed our customer profile and how it's been continuing to shift up over time. It's worth noting, our company is 11 years old. And this enterprise opportunity, it takes a while to nurture. You have to have the right sales efforts, and then they have to adopt the technology. So I think over the next decade, you are going to see our largest customers get larger and larger.

And then they have to be ready to adopt. A lot of those -- if you think about a Datadog or Palantir, those are fundamentally IT-oriented products, and the market is primed to consume a bit faster because they don't have to put hardware devices on the bulldozers and that kind of thing. So that's the practical side that we also think about, is in the fullness of time, we know that these customers can get very large. You heard about the scale that Performance Food Group operates at. Like there are so many things we can do for them, but they need to put us on each of those trailers. They need to get this out to the front line. So that's why we think of it as the opportunity is absolutely there. We're going to continue to build out the platform, but it's not going to be all at once. It's very rare for someone to land at that scale.

Maybe Amit, like as Johan and David continue to build more products is awesome. Kind of what's your view from a customer perspective? Do you think about opportunities as you assign them out to accounts? Like does it get bigger, smaller? Like how do you think about that?

I think I would echo what Sanjit said. It will continue to be a bigger opportunity, but the change management on the customer side is a lot. So that's where they'll take time to adopt it.

Michael?

Let me give Dominic a question.

[indiscernible]. I was trying to block him actually.

I noticed.

So one of the questions we get about Samsara is just rising or just across technology, but just rising component costs and impacts to financial profiles. We know you have a sophisticated procurement team. We know there have been periods previously where we've seen some free cash flow margin impacts from ramps in costs. So can you just speak to your ability to manage gross margins and free cash flow margin in a market that's seeing cost escalation?

Yes. I mean -- so for this year, again, I think we're trying to have gross margins be flat to where they were last year. And we've guided to still in this increased price environment, 100 basis points of free cash flow margin. And so I think that we're doing a pretty good job of managing it. And again, we've operated through these cycles before. If you go back to 2022 coming out of COVID, supply chain shut down and couldn't turn on fast enough to kind of meet all of the demand. And we were in a much different financial position at that time.

Now, we've got $1 billion, $1.5 billion of cash. We're generating positive free cash flow. We're well capitalized to be able to handle this. And the supply chain, our team is more sophisticated and the relationships that we have are stronger. So we actually view it as -- we feel very well equipped to handle this period of time, but also as like a strategic advantage in that, we are the biggest company. We're the most well capitalized. We have the best strategic relationships. You can hear the customer demand just from the customers kind of on the panel and their kind of desire to go through digital transformation. And so it's really an opportunity for us to drive more market share gain and really take advantage of our -- how well capitalized we are as like a strategic advantage.

Kirk?

I don't know if this is for Dom again, I won't put you on the spot, or maybe Amit. But just how do you think about scaling internationally right now? You're seeing really good product market fit. There's always a concern that you scale too fast, you have too many people in the field. But how do you think about that right now? Because it would seem all the same opportunities in Western Europe, Mexico exist that they did in the U.S. Just -- I'm just trying to think about the pacing on that, I guess.

I think we really just look at the data and like how productive we are and what we're hearing from kind of customers, and we're very dynamic in the way that we're kind of rolling out how we're allocating capital. We allocate it across different -- obviously, the product features for different geographies have kind of different needs and obviously, on the go-to-market side and how much kind of capacity we're ultimately adding. And so we really just look at the data and respond. we have the advantage of not being in a situation where these international markets are as fragmented as they are in the U.S.

So we don't have these like really large competitive incumbents where we have to kind of race out with really bad unit economics to get into these markets to win. We can kind of take our time and pace the investments in the capital based on what we're seeing and making sure that we're not kind of chasing bad unit economics. So I'd say it's very dynamic. International is a huge important part of the durable growth strategy, and we feel good about the investments we're making this year.

Matt?

This is Mike Richards for Matt Hedberg at RBC. Maybe just something we didn't talk a lot about today was Agent Studio. And so I was just curious your thoughts around the ability to productize bespoke agents that these companies are making and how that will accelerate your product road map.

Maybe Sanjit or Johan, kick it off.

Yes. Yes, sure. So in this Agent Studio, that is exactly what it is for. Customers can create bespoke agents, and they can specify them in plain English and what they want them to do. We don't have all capabilities in there, but we see this expanding such that they can truly integrate into their operation and do a multitude of tasks. So as such, we see this as a very exciting path forward, especially as part of the platform and the larger connectivity that we have as part of that.

And the way we think about productization, we've talked about operational intelligence in Johan's demo. So you saw like Waste Intelligence, for example. Some of those, we may see customers be able to get towards with Agent Studio, but maybe to really go big, to really make it amazing, we're going to need the product teams to get involved and build some more capabilities. So this is what we mean by running feedback loops. We're going to keep an eye on, well, which are the breakout templates that people are really attaching to. We're going to spend time with those customers to understand what else could we build. Are they set with Agent Studio and the consumption model there? Or would they like a full-blown product? And that's where we have to be dynamic.

Great. All right. Any other questions? Okay. Let me wrap up then. Okay. Well, thanks for joining us today and learning more about the Samsara story. Goodbye, everyone, and we'll see you again soon.

Good afternoon, and welcome to Samsara's First Quarter Fiscal 2027 Earnings Call. I'm Mike Chang, Samsara's Senior Vice President of Finance. 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.samsara.com. The matters we'll discuss today include forward-looking statements. Actual results may differ materially from those contained in the forward-looking statements and are subject to risks and uncertainties described more fully in our SEC filings. Any forward-looking statements that we make on this call are based on assumptions as of today, June 04, 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'll discuss our first 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'll only provide constant currency commentary when there's a 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 the call to Sanjit.

Thanks, Mike, and thank you, everyone, for joining us today. Samsara delivered a strong start to FY '27 with another quarter of durable and efficient growth. We ended Q1 with nearly $2 billion in ARR, growing 30% year-over-year and achieving our second -- our third consecutive quarter of GAAP EPS profitability. We added $101 million in net new ARR, also growing 30% year-over-year or 27% in constant currency.

Our largest customers continue to drive strong growth. We now have over $1.2 billion in ARR from our customers spending $100,000 or more, growing 37% year-over-year and accelerating for the third straight quarter. In Q1, we added 169 customers with $100,000 or more in ARR and 15 customers with $1 million or more in ARR. Large customer wins in the quarter include Hertz, one of the world's largest car rental companies; Foundation Building Materials, a leading North American specialty building materials distributor; the State of Connecticut; and one of the world's largest pizza companies.

Over the past few months, I visited dozens of our top customers and prospects in North America and Europe. These operators are being asked to do more than ever, and they're turning to Samsara for help. 3 themes emerged as consistent drivers of Samsara adoption. First, customers are scaling rapidly to meet surge in global demand for infrastructure build-out and need technology that can grow with them. Second, customers are expanding across our platform.

They're adding Samsara's emerging products to further digitize their operations and unlock savings well beyond their core product deployments. And third, interest in operational AI and agents continues to grow rapidly, although most operators are still very early in their adoption journey. Our customers are building the infrastructure for the global economy. For decades, technology investment flowed primarily into the world of bits, software, data and digital workflows. The next wave is the transition from bits to atoms, applying AI and intelligence systems to the physical world of vehicles, equipment, job sites and frontline workers.

Our customers are at the center of this transition. They're asset heavy, labor-intensive operators in critical industries, and they spend about 80% of their revenue on operating costs. As their operations scale, so does the number of physical assets and frontline workers they manage. Today, they're seeing extraordinary demand driven by a few tailwinds. The build-out of AI and data centers is driving massive investment across the physical economy. Supporting that build-out requires new power generation, energy systems, cooling infrastructure and grid and transmission capacity.

Additionally, governments are investing in the modernization of aging public infrastructure and private enterprises are transforming their operations to meet growing customer demand. We believe these tailwinds are only accelerating. According to McKinsey, addressing the global need for new and improved infrastructure will require roughly $106 trillion in investment by 2040. Samsara's customers are at the center of this buildout, and we believe this opportunity will only grow in the years ahead.

Companies in the world's most critical industries are choosing Samsara's connected operations platform to improve the safety, efficiency and sustainability of their operations. As they scale, so does the need for real-time visibility and actionable insights, which is driving more of them to standardize on Samsara. I'd like to share an example of one of our new customers in the quarter who is operating at the center of today's infrastructure buildout.

In Q1, we partnered with a global engineering, architecture and environmental consulting firm with more than 34,000 employees. They're using Samsara to connect and manage their diverse fleet and assets through a single platform. With Samsara's telematics, they're connecting their heavy-duty trucks, medium and light duty vehicles and passenger cars across the U.S. and Canada. They're also using asset tags to track and monitor nonvehicle assets, including trailers, marine vessels, ATVs and field equipment. Together, these applications provide them with one operational view across distributed projects and unlock new workflow capabilities.

For example, they're using Samsara to power an operational billing workflow that tracks vehicle usage by driver, project and business versus personal use. This helps them build project mileage back to clients and support tax reporting requirements. They're also deploying AI video-based safety to support driver behavior detection, in-cab coaching and broader safety score improvements. We believe Samsara will help them reduce operational costs by up to 10% within 18 months.

We're proud of the impact we're making together with our customers. Our emerging products contributed more than 20% of net new ACV for the second consecutive quarter. As customers realize the value of the platform, they're expanding their partnership with Samsara to take on more of their operational challenges. What often begins is the deployment of our core AI video-based safety or telematics products evolves into broader digital transformation as they adopt additional products to further digitize our operations and increase savings.

Connected asset maintenance is one area where we're seamlessly at today. Our customers typically manage tens of thousands of vehicles and assets that degrade over time. Maintenance is one of their largest cost centers, consuming an average of 10% of operational budgets. The average age of light-duty vehicles has increased from 11.5 years to 12.8 years over the past decade. And the parts and labor costs have risen 27% since 2020.

Yet many organizations still rely on outdated pen and paper systems that waste time, increase costs and fail to provide the insights they need to stay ahead of equipment failures. Samsara's connected asset maintenance helps customers shift from time-based and mileage-based maintenance schedules to a data-driven approach. Many organizations today are either over maintaining assets, wasting money on unnecessary service intervals or under maintaining them, risking costly breakdowns and safety incidents. Our maintenance solution brings these capabilities together in a single dashboard, giving organizations a complete view of fleet health across fault code intelligence, real-time vehicle diagnostics, work order management, integrated warranty and inventory management and a purpose-built technician experience.

I'd like to share another customer example. This one being a customer using our maintenance products. In Q1, we expanded our partnership with one of Canada's largest supermarket chains with over 1,600 stores and 128,000 employees. They manage a mixed fleet of tractors, trailers and refrigerated units across distribution centers nationwide. Their legacy maintenance system didn't integrate their vehicle data, forcing teams to rely on manual processes.

They chose Samsara's connected asset maintenance to replace that system and unify their entire maintenance operation on 1 platform. With telematics and asset gateways already deployed, fault codes and inspection reports now automatically trigger work orders, helping teams detect issues early and reduce unplanned downtime across their temperature-sensitive supply chain. They're building out their full maintenance operation on Samsara from preventive maintenance scheduling to work orders to vendor management, parts inventory and AI invoice scanning that eliminates manual data entry.

Warranty recovery and total cost of ownership tracking rounded out with a complete financial picture of every asset. It's a great example of how customers are expanding beyond Samsara's core products to digitize our operations and achieve more savings. I consistently hear from customers that one of the biggest constraints on growth is worker capacity. The number of frontline workers required scales directly with revenue and with turnover rates of 40% to 50%, that's a direct drag on capacity.

Many of these roles require specialized workers like electricians, heavy equipment operators and construction specialists who are increasingly in short supply. This is not a cyclical challenge. It's a structural one and is holding back growth for some of the most critical industries in the global economy. We believe operational AI represents one of the biggest opportunities to solve this problem. It uses our camera and sensor data to detect and analyze real-world conditions with initial detections focused on waste management, public sector and student transportation.

Combined with agents, it automates routine tasks so every worker can accomplish more, reducing the need for additional headcount and helping organizations scale in a tight labor market. In May, we gathered hundreds of public sector customers at our Go Beyond event in Chicago, where we introduced waste intelligence, ground intelligence and ridership management. We showcased how we're working with some of the largest waste management companies and cities in the U.S. to automate entire frontline operational workloads. We're still in the early innings of this opportunity, and so are our customers, but the early results are compelling, and we see this as one of the most important areas of investment for Samsara in the years ahead. I'd like to highlight the impact of waste intelligence, which helps customers increase revenue and ground intelligence, which helps them reduce operating costs. Waste management companies are missing revenue opportunities, struggling with worker capacity constraints and spending hours manually resolving service disputes. Samsara's waste Intelligence addresses this directly through 3 core capabilities.

Service verification, which automatically confirms a collection occurred at the scheduled time and location, providing customers a documented proof of service, overfill detection which identifies when containers exceed capacity, allowing operators to document overages and capture additional revenue and contamination detection, which we are developing to identify nonrecyclable or hazardous material and waste streams and helps enforce contamination policies and fees. On the cost savings front, pot holes account for approximately $3 billion in vehicle damages every year in the U.S., yet most cities still rely on 311 calls to identify road defects.

Samsara's round Intelligence solves this problem by leveraging trillions of data points from vehicles across our platform that covers 99% of major U.S. routes. We fuse AI dashcam and multicam data with GeForce data from our telematics devices to assess pot hole type and severity, map defects across the road network and direct public works teams to prioritize payers. New damage is captured immediately after storms or freeze-thaw cycles rather than waiting for outdated payment surveys, giving our customers a continuously updated picture of road conditions before anyone leaves ER. This turns a reactive, complaint-driven process into a proactive data-driven one eliminating guesswork and allowing teams to fix more potholes per shift. It has been an exciting start of the fiscal year, and we remain focused on delivering on our mission to increase the safety, efficiency and sustainability of the operations that power the global economy. We're grateful to partner with our customers as they modernize their operations and build the infrastructure the world depends on. We look forward to seeing many of you at our customer conference Beyond, which is taking place from June 23 to 26 in Las Vegas. At Beyond, we bring together leaders across industries to share learnings on digitization and the future of connected operations. We will also be hosting an Investor Day on June 24. We hope you can join us. I'll now hand it over to Dominic to go over the financial highlights for the quarter.

Thank you, Sanjit. Q1 was another quarter of accelerating growth and improved operating leverage, highlighted by strong performance across several key metrics, including 30% year-over-year net new ARR growth or 27% in constant currency, our second highest growth rate over the past 9 quarters, leading to 30% total ARR growth, which was the same growth rate as last quarter at a larger scale. 31% year-over-year revenue growth or 29% in constant currency, accelerating sequentially at a larger scale. 37% year-over-year ARR growth for $100,000-plus customers, the third consecutive quarter of sequential acceleration and 62% year-over-year ARR growth for $1 million-plus customers, the fourth consecutive quarter of sequential acceleration.

And finally, achieving our third consecutive quarter of GAAP 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 cannot be easily replicated.

Second, we leverage this data using AI and agents to surface operational insights and automate workflows across our platform. Third, we have exposure to secular growth in physical AI. The AI transition from bits to atoms is underway, and Samsara is at the center of it. End markets such as construction, field services, energy and utilities are not only benefiting from building out global infrastructure, they're increasingly using AI to manage greater scale and complexity. The stock price performance of our top 100 public customers is up more than 30% over the past year.

Fourth, we have a differentiated value prop in mission-critical workflows. Our products deliver fast tangible ROI with quick payback periods. And lastly, we target the large, less discretionary operations budget. Our customers invest approximately 80% of their revenue in managing their operations, and we help them optimize the significant cost base, creating a large opportunity to drive customer impact and sustain long-term growth. Okay. Now turning to our results. Q1 net new ARR was $101 million, an increase of 30% year-over-year or 27% in constant currency, our second highest growth rate over the past 9 quarters. More broadly, net new ARR over the last 12 months was $455 million, growing 27% year-over-year or 25% in constant currency, accelerating for the fourth consecutive quarter. Q1 ending ARR was approximately $2 billion, an increase of 30% year-over-year, representing the same growth rate as last quarter.

And Q1 revenue was $479 million, an increase of 31% year-over-year or 29% in constant currency, accelerating sequentially at a larger scale. Several factors drove our strong top line performance in Q1. First, large customer momentum is leading to higher growth at scale. In terms of large deals, we signed 11 $1 million-plus net new ACV transactions in Q1, our second highest quarter ever. This reflects the success of our R&D and go-to-market investments to support these larger customer opportunities.

In terms of large customers, we ended Q1 with 3,363 $100,000-plus ARR customers, including a quarterly increase of 169. ARR from $100,000-plus customers was $1.2 billion, increasing 37% year-over-year, resulting in the third consecutive quarter of sequential acceleration. 100,000-plus customers represent 62% of total ARR, up from 58% 1 year ago and 56% 2 years ago.

Additionally, we ended Q1 with $191 million-plus ARR customers, a quarterly increase of 15%. ARR from $1 million-plus customers increased 62% year-over-year, representing the fourth consecutive quarter of sequential acceleration at a larger scale. Second, our customers are increasingly using Samsara as a single unified operations platform across multiple applications.

96% of $100,000-plus ARR customers subscribed to 2 or more products and 70% subscribed to 3 or more. In Q1, 9 of the top 10 net new ACV deals included 2 or more products and 4 included 4 or more products. In Q1, we deepened our partnership with the world's largest food service distributor. Since adopting Samsara's AI video-based safety solution in 2018, this customer has completed 20 expansions. This quarter, the company took a significant step forward by replacing its incumbent telematics provider with Samsara and adding asset gateways, commercial navigation and connected workflows, becoming a 5-product customer.

These solutions will help their operators navigate smarter, digitize field work and deliver better on-time performance across its massive distribution network. And strong multiproduct adoption like this 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. In terms of emerging products, for the second consecutive quarter, more than 20% of our net new ACV came from emerging products. 7 of the top 10 net new ACV transactions included an emerging product, 42 transactions included more than $100,000 in emerging product net new ACV, and we signed our largest ever connected asset maintenance deal with Hertz, one of the world's largest car rental and mobility solutions providers and a software-only deployment across their North American vehicle fleet.

In terms of end markets, wholesale and retail trade was our largest vertical in Q1, contributing its second highest ever net new ACV mix and the third consecutive quarter of sequential growth acceleration. And construction contributed the second highest net new ACV mix in the quarter. And in terms of international, 18% of net new ACV came from non-U.S. geographies tied for a quarterly record. Europe contributed a record amount of net new ACV mix and landed its largest new logo win to date with a leading U.K. grocery retailer. And Canada net new ACV growth accelerated sequentially for the second consecutive quarter, resulting in its highest net new ACV mix in the last 8 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 19% in Q1, up 5 percentage points year-over-year. Free cash flow margin was 15%, up 3 percentage points year-over-year, including the 15th consecutive quarter surpassing Rule of 40. And GAAP EPS was a positive $0.08, representing our third consecutive quarter of GAAP EPS profitability. This included a $30 million arbitration award from one of our lawsuits against Modiv for claims of breach of contract, fraud, unfair competition and false advertising.

And GAAP EPS would still be positive, excluding this award. Okay. Now turning to Q2 and FY '27 guidance based on FX rates as of May 2. Our guidance philosophy remains the same and is derisked for potential downside scenarios. For Q2, we expect revenue to be between $482 million and $484 million, representing 23% to 24% year-over-year growth or 22% to 23% growth in constant currency. Non-GAAP operating margin to be 18%, non-GAAP EPS to be between $0.15 and $0.16, and we expect to be GAAP profitable for Q2. For full year FY '27, we expect revenue to be between $2.005 billion and $2.013 billion, representing 24% year-over-year growth or 23% to 24% growth in constant currency. Non-GAAP operating margin to be 20%, non-GAAP EPS to be between $0.70 and $0.72, and we also expect to be GAAP profitable for full year FY '27.

Finally, please see the additional modeling notes in our shareholder letter. To wrap up, in Q1, 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 instrument physical assets with IoT hardware to generate a unique defensible data asset. We then harness that data with AI to surface operational insights and automate workflows, driving more customer value. We are 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 Mike to moderate Q&A.

Thanks, Dominic. We will now open the line up for questions. The first question today comes from Derrick Wood with TD Cowen, followed by Alex Zukin with Wolfe Research.

Congrats on another great quarter. I guess I'll start with kind of interesting to hear of a secular trend around customers shifting from time-based and mileage-based maintenance schedules to one that's more data-driven. How would you characterize where the market is today in this journey and how you think it's going to play out over the next few years? And maybe give us a sense as to what percentage of your addressable base is using Samsara Connected Asset Management today?

Sure. So I think this move from time and mileage-based to data-driven, it's still early. Many of the most sophisticated fleets see the value in it because they're either overmaintaining or undermaintaining their assets. They've known that. We now have the data to help them make smarter operational decisions. But if you step back, it is still pretty early in that kind of transition or adoption curve. And that also reflects we've only been offering this product for a few quarters now.

So we're excited to see this initial growth. The deal with Hertz was an exciting one as well, but it's still early days for connected asset maintenance. As a reminder, all of these physical operations, they operate in asset-heavy industries. All of those assets need maintenance. So that's the opportunity we see ahead.

Great. That's exciting. And then maybe, Dom, one for you, just on gross margin. It was down 200 bps year-on-year. It sounds like some of this is due to AI investments. Can you double-click on where this is coming from exactly? And then, of course, we get questions on memory prices and how that may be having any impact to you guys on gross margins or cash flow. So anything to flag on that side as well?

Yes, sure. So we are spending more money on AI and cloud really to drive more products and features. We expect to be able to offset some of those added costs with other COGS-related optimizations as well as OpEx reallocation in the form of go-to-market R&D and primarily in G&A. G&A had 5 percentage points of year-over-year improvement.

So we're able to deploy some of that into COGS as well. We think that we're going to be able to keep gross margins, let's say, roughly flat for FY '27. And really, we're going to show more leverage on the operating margin side. And so we beat our Q1 operating margin guidance, and we were able to raise for the full year from 19% to 20% as well.

The next question comes from Alex Zukin with Wolfe Research, followed by Chris Quintero with Morgan Stanley.

Sanjit, maybe the first one for you. It's pretty exciting, honestly, to see [indiscernible] into visual intelligence. I think it's pretty clear how infusing AI into your platform, leveraging all of the strategic data assets that you've been assembling for years is clearly going to pay off. So maybe just a simple question, how are you going to be charging for these tools? When will we -- or these products, when will we start to see them actually show up in the ACV from new products? And kind of maybe just stack rank where you expect to see some of the most momentum between the 3? And then I've got a quick follow-up, Dom, for you.

Sure. So I think we're excited about visual intelligence as well. We treat these cameras as sensors, and there's just tremendous amounts of value out there. For some of these products like Waste intelligence, these are essentially additional SKUs that get priced alongside of our existing products. So it's quite simple for the customer to budget for them and adopt them. There are others that are priced like the Road Intelligence product that are priced on a per mile basis, which is a data-only offering. So we're experimenting with these different pricing models. And then as we think towards things like agents, we do expect to, at some point, offer a consumption-based model.

We need to test this pricing and make sure it works well with our customers, but that aligns the value they're getting and our costs with how they adopt it. So we're excited about that. To answer the second part of your question around which ones are we most excited about, I think we're going to see how they perform in the market. Like I said earlier, there's a tremendous amount of value around each of these areas. It's hard for us to predict exactly, but the betas have been really strong. Customer feedback has been really positive. So we're excited to get these out there.

Excellent. And Dom, for you, the net new ARR figure in Q1 was pretty incredible. All of your larger cohorts are growing even faster. So was there anything unusual about the quarter? It seems like you went out of your way to kind of pass through a stronger raise than ever from a revenue perspective for the year. And I think you put a comment about the largest customer stock performance. So maybe just connect those dots to the message you're trying to send with your guide here today.

Yes. Well, we were able to pass through not only the Q1 revenue beat, but then -- which was like $23 million and then an extra kind of, I think, $19 million on top of that or getting to $39 million for the overall revenue guidance. So we clearly feel good about the momentum that we're seeing. Nothing really stands out as kind of onetime in nature in Q1 this year, any kind of large deals pushing or pulling. It was a pretty -- it was a quarter that we kind of expected in terms of the deals landing when they did. But clearly, with the large customer momentum, the strength that we're seeing in emerging products, even the international, strongest international quarter that we've had gave us the confidence to raise the guidance above the Q1 beat.

Next question comes from Chris Quintero with Morgan Stanley, followed by Michael Chernin with Wells Fargo.

Congrats on a solid set of results, especially on the GAAP net income side, which, if I'm not mistaken, means you are now eligible for some index inclusion. So congrats on that. Maybe first on the $1 million-plus ARR cohort, really nice to see that acceleration. Maybe could you talk a little bit about what you're seeing and how those discussions are going with some of your largest customers and what's really driving that momentum up there?

Yes, I'll take that one. I think with these large customers, these $1 million-plus customers, they are clearly excited about this connected operations vision. They have very large frontline workforces. They have often tens of thousands of assets, vehicles, trailers, equipment, and they're trying to coordinate all this. And as we now enter into new areas like maintenance and training and qualifications and workflows, they see an opportunity to bring it together on one platform. So the multiproduct land has been really strong. And then the kind of expand motion as they digitize more of their operations also strong. So this has been part of the strategy for many years is to focus on these large complex operations. I think we're seeing it now flow through to the results.

Excellent. And then -- maybe on the go-to-market AI side, like I'm curious as you start to roll out more of this operational AI and intelligence, how you're thinking about the go-to-market motion? Do you need to make any adjustments there? We've seen other software companies start to deploy more of a forward deployed engineer type of model. So curious if that's also something you're considering there.

Chris, we're keeping our ear to the ground in terms of what works well for our customers. There's -- it's actually a very interesting dynamic or backdrop where most of our customers are entering this digital transformation wave really for the first time. So they're less advanced than the kind of IT shops that may be writing a lot of code and kind of doing the forward deployed engineer thing. We are finding that many of our customers are in Phase 1 and Phase 2. So they're simply trying to get data about their operations, get that initial set of insights. And then they're experimenting with newer technologies like our agents and these newer SKUs to see what else they can unlock. So I would say we say we want to stay close to these customers, but it's not exactly the same model that we're seeing in the kind of software IT space.

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

I want to zoom out and just ask one for both Sanjit and Dom. You're reaching $2 billion in ARR scale. You're still growing around 30%. So just one of the questions we field most often is just how to think about the durability of what you're delivering. And for investors who are asking where the next active growth comes for the business? Are there certain products in the emerging bucket or some of the emerging segments or categories you'd point them towards as you're really running into some rare air with that profile.

Yes. I mean you've really seen over the last several quarters, the overall kind of ARR growth rate really stabilized around 30%, hitting 30% again at the same growth rate as last quarter at a larger scale. I think it's really -- what makes us excited is that it's really coming from many different areas. So obviously, large customer momentum has been incredible for us. 62% of ARR coming from our largest customers But both the $100,000 and $1 million plus ARR has been accelerating now at larger scale sequentially for several quarters in a row.

The emerging products have really demonstrated a lot of success over the last year or so, 2 consecutive quarters of more than 20% of our net new ACV [indiscernible] ] And we continue to add more and more products into that emerging bucket. And then even beyond that, things like international, again, really strong quarter, 18% of net new ACV mix. And so I think we have a number of different growth vectors and all of those are really kind of firing on all cylinders, and that's allowing us to really demonstrate durable growth. .

Great. Next question comes from Jim Fish with Piper Sandler, followed by Matt Hedberg with RBC. .

I want to circle back on Derrick's question. I guess, how are you guys feeling about components and supply availability? Because I don't know if you address that one. And then, Dom, just on the expansion side, can you help us in terms of the thought process or what's going on underneath between adding more assets here versus adopting more software modules, especially with some of these new offerings that you have here for the year, and specifically also the way to think about the net new ACV mix this quarter between new and expansion.

Yes. So obviously, I think most investors are aware the kind of DRAM and NAND supply chain-related markets right now are definitely a little bit tighter with prices increasing. I think we've done a pretty good job of almost never running into a situation where we're stocking out. So we're -- we have a pretty, I'd say, scrappy supply chain team and we're able to almost always find all of the supply that we need to meet customer demand. We have another problem there. I'd say the visibility isn't as good as it has been in the past, meaning visibility out for a couple of quarters where you used to have much longer-term visibility but we have confidence that we're going to be able to fund the supply that we need to ultimately meet customer demand as we look through the rest of FY '27. .

I think it's worth also noting just even from a competitive standpoint, we feel like we're really well positioned. We're the best capitalized to navigate through this. And so we view this as an opportunity potentially even to capture some additional market share. So that was the answer to your first question. Secondly, from the expansion standpoint, for us, it tends to be more driven by more assets or licenses on the same product. Many of our customers land with multiple products upfront. So like 9 of the top 10 deals had 2 or more products.

And then customers will do expansions very often with the same products that they have, but they'll add more assets, they'll add more licenses. I called out that large global food distributor that has done 20 expansion since they first landed in 2018. And so that's very common for our customers, more so than doing a cross-sell of a brand new product that they didn't have before that's lesser of a driver of the expansions.

Great. Next question comes from Matt Hedberg with RBC followed by Matt Bullock with BofA..

Great. The emerging product success is obviously great to see, and it feels like there's a number of things I know that you're excited about. I don't think you guys called out asset tag this quarter. I know 4Q was particularly strong. Anything to call out there, any wins, any sort of traction from that front?

It was another strong asset tags quarter. Again, I would say just even more taking a step back looking broadly at the emerging products bucket, again, 20% -- more than 20% of net new ACV. There was, again, not more -- one product did not contribute more than 50% of the overall net new ACV mix so that we've seen that pretty consistently. So I'd say a widespread contribution from things like AI multi-cam asset tags was definitely in that bucket. We had the large connected asset maintenance deal. And so it's really coming widespread, but asset tags was another strong quarter.

that's great. And then building on the questions around the durability of growth. I know you guys have been actively adding quite a bit of capacity over the last several years. How -- I mean with the success that you're seeing now and really just like it feels like you guys should kind of put your foot down on the accelerator. How do you think about capacity adds as we think towards the balance of the year?

Yes, absolutely. Adding more quota-carrying sales reps for a direct sales motion -- for us is a key input to growth. We are definitely adding more headcount, I'd say, pretty aggressively as quickly as we possibly can into this year to kind of meet the demand that we're seeing and kind of make sure that we're able to kind of meet all the customer demand. .

And then for us, it's also thinking about productivity as well, which has been really strong for us, if I think about like our ARR or employee that is up double digits year-over-year and a big driver of headcount is clearly our go-to-market organization. So we're adding more capacity at a high pace and then we're seeing better-than-expected productivity as well.

Great. Next question comes from Matt Bullock with BofA, followed by Kirk Materne with Evercore. .

I wanted to ask about the guide because obviously, a really strong increase to the annual guidance. But as I look at the second quarter revenue guide, it looks like it might have been a little bit softer on a sequential basis. So Dominic, could you help us reconcile those 2 trends? Is there anything to call out in terms of linearity or large deal ramp in the back half?

No. I mean I think the guide that we put up was ahead of consensus expectations for Q2. And then again, I would really look at the full year guide almost doubling the amount of the Q1 beat. And so I think that demonstrates that we feel really good about the quarter, the momentum that we're seeing gives us a lot of confidence to be able to raise the guide, both for Q2 and for the full year ahead of expectations.

Got it. And then just 1 more, if I could. I wanted to ask about new products. Obviously, some really strong momentum on the booking side there, a few quarters in a row of 20% plus mix. Is there anything to call out in terms of comps as we move through the second half of this year given the strength we saw in the second half of last year? Or are you adding enough new products into that bucket that you won't -- you couldn't see a slowdown of momentum from early adopters.

I think we at this point that just given the momentum that we're seeing with the emerging products, we expect it to be a really important contributor. So again, more than 20% for the second consecutive quarter, we're adding more and more products. So we expect that will continue to be a material driver of the overall net new ACV mix.

And then obviously, the other 70-ish percent is coming from the core products, which continue to be strong growers and continue to be the kind of the beachhead into these customer opportunities. We're going to need both of those to continue to be durable growers for us to accomplish the forecast for the rest of the year?

The next comes from Kirk Materne with Evercore followed by Jason Celino with KeyBanc.

Congrats on a nice quarter. I guess I was curious about the software [ only when it hurts ]. And can you just talk about how a deal like that comes about? Is it a little bit of a different sales cycle? And can something that starts software only go back to having a device component to us longer term. And then, Dom, I was just curious, your last couple of years the deals have gotten bigger, you noted there's more volatility in big deals just sort of definitionally. But are you seeing better sort of just cadence through the pipeline on those bigger deals? Are you getting more comfortable, I guess, in terms of just the potential volatility in those.

Sure. I'll take the first part of that, Kirk. So the Hertz deal came together as we were meeting with their EVP of Operations and fleet. As you probably know, Hertz operates one of the largest vehicle fleets in the world, we're talking about 0.5 million vehicles. They have some unique dynamics in terms of how quickly those vehicles turn over.

And so maintenance and this kind of software-only opportunity seem to be what was most relevant to them. That being said, they got to know our entire connected operations platform. They do have other parts of their operations where the hardware products could play a big role. So we view it as an opportunity to really partner deeply, get to know them well, get to understand their operations. and maintenance is just where we're going to start, but there's a lot of different opportunities for us to partner together.

Yes. And on the second question, we feel really good about the pipeline and the demand that we're seeing in terms of large deals for the rest of the year. I think many investors know these are larger enterprise sales cycles, they can take multiple quarters to ultimately land. And so the specific timing of when the deals are going to land, especially as we get into kind of the back half of the year, there's less visibility into that, but just the overall amount of pipeline that we have for the large deals, we feel really good about.

I think that's why we, in this quarter, started talking more about net new ARR in terms of the -- like LTM over the last 12 months as opposed to quarter-over-quarter where you may get some more of that volatility, looking at it on a longer period of time like LTM just likely smooth out those potential for quarter variations.

Great. The next question comes from Jason Celino with KeyBanc, followed by Dan Jester at BMO. .

So how might the recent Supreme Court ruling on broker liability benefits Samsara? Obviously, Samsara has a diversified business and this ruling is specific, only a subsegment of your customer base. But historically, regulation, some mandates have acted as catalysts. Could we see this impact other industries? Or how are you thinking about it for your business?

Sure. I'll take that. So Jason, just maybe background for the others on the call, the Supreme Court basically ruled that freight brokers can be sued for hiring unsafe carriers. This is basically, we think, going to flow through to just heightened focus on being safe on the roads. It just highlights the risk of running these physical operations businesses.

So in that sense, we think that it's good for our business overall because a lot of what we do is in terms of improving safety. Most of our customers tend to be the larger fleets. They are safer by nature. They have larger safety teams. They invest more heavily in safety. So we're excited to be able to continue to partner with them it may impact some of the smaller folks out in the market, the owner operators who we don't tend to focus on. But that's a dynamic. It's right now mostly focused on the brokers and the kind of transportation side of the industry from what we understand. .

Okay. Interesting. And I don't think anyone's asked yet. But what are you seeing from like a macro standpoint? Obviously, the numbers speak for themselves, good. It sounds like you have a lot of momentum. But high oil prices are top of mind and a lot of your customers have that as a feedstock for feed input. Are you seeing anything from like a sales cycle or close rate or anything to share there?

I would say, by and large, our customers are busier than ever. I highlighted some of the industries like construction, where they're building out these data centers, they're modernizing tons of infrastructure, including electrical grids we're seeing in public sector, they're still busy. You're right that there is some increase in input costs. So basically, high oil prices translate to increased price of the pump for fuel that can be anywhere from 30% to 40% for some customers, but they are taking that challenge head on and using technologies like what we offer in our telematics offering to go and optimize things like engine idling and even routes. And so we see this as just kind of a cost of doing business for most of our customers, but their end market demand is strong. And so they, like I said earlier busier than ever.

Great. Next question comes from Dan Jester with BMO, followed by Matt Martino with Goldman Sachs.

Great. Maybe just 1 for me. So -- maybe just it'd be helpful to get an update in terms of how AI is helping you scale the business internally. A lot of great information on the product side today, but inside Samsara, what are you doing today?

How is that scaling? And maybe with the question earlier on hiring. And obviously, part of that was around the go-to-market team. But within the rest of the organization, do you still think you're going to need to hire as many people today as maybe you had thought maybe a couple of quarters ago?

Sure. So we might be able to tag team on this. I would say, in general, we're pretty avid users of AI internally. Certainly, our engineering teams have been using coding bots and agents for quite some time, they're able to develop more features, go deeper with our customers, and we think that's a great thing.

And then we're automating workflows throughout the rest of the business, which is driving efficiencies. I think Dominic could speak to some of the numbers. But Overall, our G&A teams are adopting AI to automate tasks. We're using it throughout our go-to-market functions to do things like account research and really understand customer context. But maybe you want to talk matrics?

Yes. In terms of overall headcount expectations for the year, no changes to what we discussed on the last earnings call. Most of the net headcount increases are going to be in the go-to-market, again, just given that direct selling motion that we have. I would say other functions outside of go-to-market are probably going to be roughly the same size, if not smaller. So we do expect this improved productivity is going to be a bigger driver of growth versus adding more headcount. And we saw that again in Q1, double-digit growth in terms of ARR per employee. So we are seeing more productivity across the business.

Right. The next question comes from Matt Martino at the Goldman Sachs, followed by Mark Schappel with Luke Capital.

Maybe just to hit on the memory dynamic once more. Beyond managing your own margins and inventory, are you actually seeing weaker capitalized competitors pull back or stretch on price and lead times in a way that's opening deals for you? Like in other words, is there a genuine share gain window here that's starting to show up in the pipe?

Yes, Matt, I'll take that. I think it's still too early to say. A lot of these products of this inventory, you have to do supply planning and basically get the inventory built months in advance. So my guess is we'll see some of these [indiscernible] play out in the second half of the year, but that's just my kind of high-level take.

All right. Next question from Mark Schappel with Group Capital followed by Andrew DeGasperi with BNP.

I want to drill into the public sector opportunity. if I could. In May, you had some product announcements on that front. In the public sector, what products are you leading with? And is the product uptake rate, is that consistent with what you're seeing across other industries, such as like construction or large trucking fleets?

Yes. I would say, Mark, the public sector customers tend to adopt a similar set of products, and they're adopting the platform similar to the others that we talked about. So multiproduct lands are quite common. These would be things like telematics, the cameras, but also equipment tractors and connected asset maintenance.

So I think their needs are very similar. There are some slightly different software integrations that we do because they use like a different suite of software for reporting, which we offer. We have 350 integrations on our platform. But the core product dynamics look pretty similar, I would say.

Next question comes from Andrew DeGasperi with BNP followed by Alex Sklar with Raymond James.

Great. I just wanted to follow up on the question asked earlier about the Hertz deal. In particular, I wanted to ask, is there a difference in the economics that is software only versus a more traditional sale that includes hardware? And separately, could you see this type of deal be more popular going forward? Or was this unique to a rental company like Hertz?

Yes. Definitely, software-only deals are definitely gross margin accretive. One of the largest cost of goods sold that we have is the amortization of hardware devices. And so when it's a software-only deal that cost does not hit us, and it's accretive to gross margins. I think more and more of the products that we're rolling out emerging products, we've got a number of these kind of software-only related products.

And so whether it's something like Hertz where it's something we can land with and be large scale or if it becomes an add-on, 7 of the top 10 net new ACV deals included one of these emerging products, I think it gives us opportunities to layer in some of these software-only products in addition to the core products that we've traditionally sold.

Next question comes from Alex Sklar with Raymond James, followed by Jackson with William Blair. .

Great. Sanjit, just on the emerging product success, obviously, a big ROI selling motion for you. But can you talk about what you're seeing from customer budgets over the last few quarters for those newer products? How much of the improved attach is product maturity on the Samsara side? First anything changing on the demand side or tapping into larger operations budgets?

It's an interesting question. I would say awareness is growing, that these products exist now. You can track smaller tools and pieces of equipment with things like asset tags. I mentioned earlier the switch from kind of time-based or mileage-based maintenance to data-driven. So I think it's probably a mix of both, and we have become more mature in terms of how we sell it, how our sales team engages on selling the broader platform opportunity. So it's probably even is my guess.

Next question comes from Jackson Bogli with William Blair, followed by Bella with JPMorgan.

This is Jackson Bogli on for Dylan Becker. So looking at the operational AI with waste intelligence, ground intelligence, that's subscribed as one of your most important long-term opportunities, but it's still very early on. I was just curious to get your thoughts on maybe how you plan to price and monetize agentic capabilities over time. Any thoughts on like what the adoption ramp could look like over the next few years? And how material this could become relative to the core product suite you guys have?

Yes. I would say we're excited to get these out there. Like I mentioned earlier on the call, we are experimenting with different pricing models. Some of these products like waste intelligence are sold alongside existing SKUs. Others like ground intelligence can be sold as a data product to Dominic's software point earlier. So you don't necessarily even need our hardware to get insights into road conditions. And then on the agentic side, we're in beta on that front, and we have a number of agents we're testing out. And so a lot of that is about finding the right applications and fit for those agents and then kind of partnering with the customer to do the discovery.

Great. So our last question today comes from Bella with JPMorgan.

This is Bella on for Alexei Gogolev. So just unpacking the main drivers of net new ARR this quarter, thinking about new logos versus expansion, large customers versus core where do you define that mix today? And how do you see that evolving within the next few quarters?

Yes. Biggest drivers for the 27% net new ARR growth in constant currency, second highest quarter over the last 9 quarters, large customer momentum. Again, the $11 million plus transactions and the strength in the $100,000-plus and $1 million-plus customers. I'd say number two, again, multiproduct adoption, 9 of the top 10, 2 plus products, 4 of the top 10, 4 plus products. And then the last big driver is, obviously, these kind of new frontiers, whether it's a 20% net new ACV mix plus from emerging products or the international or even the specific verticals that you mentioned like wholesale retail trade in the quarter?

Great. So this concludes the question-and-answer portion. Thank you all for attending our Q1 fiscal year 2027 Earnings Call. Before I let go, I have a few short announcements. We will be attending the Mizuho Technology Conference in New York City on June 9, the FBN Virtual Tech Conference on June 10 and the TD Cowen Corporate Access Day in Toronto on June 17.

In addition, we'll be hosting the RBC Bus Tour and the Wolfe Bus Tour on July 7. We hope to see one of these events. Finally, we are hosting our Investor Day on June 24 in Las Vegas. We will provide additional insights into Samsara's trajectory and the overall state of physical operations. Please send an e-mail to [email protected], if you're interested in attending in person. For those who prefer to attend virtually our Investor Relations website will have a link to live broadcast. That's it for today's meeting. If you have any follow-up for questions, you can e-mail at [email protected]. Bye everyone.

[Presentation]

Welcome to Samsara's Fourth quarter Fiscal 2026 Earnings Call. I'm Mike Chang, Samsara's Senior Vice President of Finance. 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. Actual results may differ materially from those contained in the forward-looking statements and are subject to risks and uncertainties described more fully in our SEC filings.

Any forward-looking statements that we make on this call are based on assumptions as of today, March 5, 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 fourth 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 only provide constant currency commentary when there is 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, divert highlights for the quarter and open the call up for Q&A. With that, I'll hand the call over to Sanjit.

Thanks, Mike, and thank you, everyone, for joining us today. FY '26 was an outstanding year of durable and efficient growth. We ended the year with $1.9 billion in ARR, growing 30% year-over-year. Our $432 million of net new ARR drove this performance, growing 21% year-over-year and demonstrating our ability to accelerate growth even as we operate at much larger scale.

Our momentum is strongest with our largest customers. We ended the year with $1.2 billion of ARR from our $100,000-plus ARR customers, an increase of 37% year-over-year and our second consecutive quarter of sequential acceleration. As we look back on FY '26, it's clear we are uniquely positioned to help digitize the world of physical operations. We help these industries transform through a combination of hardware devices, cloud connectivity, deep AI and data integrations.

At the heart of our competitive advantage is our proprietary data asset, information that simply isn't found on the Internet. This includes everything from [ Dash Cam imagery ] captured across hundreds of millions of miles of roads daily to specific maintenance inspection workflows and service routes. We now have more than 25 trillion data points flowing through our platform every year. This data provides us with the unique moat that fuels a powerful data network effect, as we add more customers and assets, our AI models become more insightful for everyone on the platform. This creates a compounding advantage that is difficult for others to replicate.

Since our founding in 2015, we've worked towards a vision of fully digitized operations. We see this transformation occurring in 3 distinct phases. Phase 1, connecting the world's physical operations, then Phase 2, analyzing the data to surface actionable operational insights and Phase 3 automating entire workflows with proprietary AI agents.

Let's start with Phase 1. Our customers are service businesses that rely on physical assets and labor and require a wide range of equipment for their operations. This includes light-duty vehicles, school buses, yellow iron construction equipment trailers, tools and even dumpsters. On average, our largest customers spend around 80% of the revenue on these types of assets and workers. By connecting their operations to the cloud using IoT hardware, we're building a massive and proprietary data asset that represents the physical world. This includes real-time data such as video, GPS locations, sensor readings and diagnostics codes which our customers use to gain operational benefits, including protecting frontline workers from fault claims and liability with HD video evidence, delivering best-in-class customer service with live locations to provide accurate ETAs and and ensuring compliance with asset and worker monitoring.

While customers can immediately achieve clear and fast ROI from connecting their operations to the cloud, this digitization is still in its early stages. This is due to the significant change management required to digitize revenue-generating assets. We believe the multi-decade effort to connect the world's physical operations creates a durable long-term growth opportunity for our business. Once we've collected all the data, our customers enter Phase 2.

We trained purpose-built AI to surface deeper cross-functional insights that were previously unattainable. For the first time, our customers can see the direct correlation between worker behavior and long-term vehicle health, how specific service routes impact both fuel efficiency and customer satisfaction and how real-time coaching helps prevent accidents and keep their workers safe. By applying AI to this operational data, our customers are using actionable insights to transform their operations.

This includes identifying safety risks through 40-plus AI detections, like drowsiness, risky weather and passenger left behind, and correlating that risk with the workers' broader safety record, simplifying compliance tracking by automating the verification of worker and asset qualifications and minimizing fuel spend through coaching driving behavior and intelligently suggesting the most cost-effective gas stations along their routes.

Our AI analysis can now go even deeper by expanding the scope beyond a single customer driving actionable insights from analyzing our network of tens of thousands of customers collectively. For example, we can predict asset breakdowns by analyzing sensor data and comparing it against data from tens of thousands of assets of the identical make model and year to understand the average time to failure, analyze weather risk by comparing national weather service data with actual camera footage from Samsara's network of millions of devices, and optimize operational performance by comparing an organization's safety records -- safety scores, utilization rates and fuel efficiency against anonymized data from industry peers to identify specific areas for improvement.

These actionable insights do more than just power dashboards. They build a high-velocity, high-quality data foundation required for automation. You cannot effectively automate what you're not first unified and understood.

Next, our customers enter Phase III. Advances in AI reasoning capabilities allow us to build AI agents to take action and automate entire workflows. We are shifting the paradigm from providing insights in Phase II which require a human to interpret and act to delivering automated outcomes in Phase 3. These agents will supercharge our customers' operations, giving them virtual teammates to completely transform their approach to safety, efficiency and sustainability.

As part of this, we're excited to announce our very first AI agent, the [ AI safety coach ]. It comprehends risk by self-reviewing data sources such as safety event videos, workers' safety records and weather conditions. This depth of understanding allows the agent to deliver automated safety outcomes, providing real-time voice coaching in the cab and personalized end-of-week coaching videos for workers. It even dynamically adjust safety alerts based on risky conditions such as increasing following distances when it begins to snw.

Beyond safety, our road map includes a suite of specialized AI agents designed to act as force multipliers for back office teams. We're developing additional AI agents to assist with compliance, maintenance and dispatching. By automating these high-frequency complex tasks, we're enabling our customers to scale their operations without the traditional linear increase in administrative costs. To realize the full potential of these 3 phases, technology must be adopted by the people who power the business every day.

Today, the majority of physical operations are moving into Phase 1 or Phase 2 of their digital transformation, which requires installation of our hardware and change management with their frontline workers. From there, the transition to Phase 3 can happen much faster as the core parts of their operation are digitized and prepared for AI automation.

The progress we've made in digitizing the world's physical operations is directly translating to our results. We partner with many of the leading physical operations organizations, including 7 of the top 10 food service companies, 7 of the top 10 waste management companies, and 5 of the top 10 wholesale and retail companies. In Q4, we added 204 new $100,000-plus ARR customers and ended FY '26 with 3,194, $100,000-plus ARR customers. Our large customer momentum is laying the foundation for durable growth as these organizations adopt more products across our platform to achieve additional ROI.

Large customer wins for the quarter include Southern California Edison, [ groundworks ] and Harris County in Texas. I'd like to share 2 examples of how we're expanding with our customers. The first is with 1 of North America's leading freight transportation companies, operating a rail network of more than 30,000 route miles. Since becoming a customer in 2021, they've used our video-based safety and telematics products on their [ freight hospitals ] to build a world-class safety program. This resulted in a 90% drop in safety events and a 97% drop in distracted driving.

In Q4, we expanded our partnership to include AI Multicam as they are growing their safety program. They were a top 10 win for the quarter. We estimate they will save over $12 million per year through fewer and less severe accidents, lower maintenance spend and reduced fuel consumption.

Another example is with Estes, which was also a top 10 win for the quarter. Estes is the largest privately held freight transportation company in North America. They operate over 43,000 trailers and 10,500 tractors to move 70 million pounds of freight daily. After initially partnering with Samsara for video-based safety and Telematics, they expanded in Q4 to add equipment monitoring, Asset Tags and connected asset maintenance, further unifying their operations on our platform.

Estes is deploying asset gateways across their trailer fleet to gain real-time visibility and safety insights. They're using Asset Tags to track thousands of smaller mission-critical assets, including [ dollies ], forklifts and ramps that are essential to their daily dock operations. They're also using connected asset maintenance to detect issues early and reduce unplanned downtime and streamlined shop operations with integrated warranty and inventory management.

We are proud of the impact we're making together with our customers. We introduced the asset tag 18 months ago, and our customers are rapidly adopting them to get better visibility across their operations from heavy-duty assets to smaller tools and equipment. This is only made possible by our industry-leading industrial-grade Samsara network, which continues to get bigger and better.

In just the last 2 years, we doubled our network density and can now detect Asset Tags in near real time. providing visibility at scale that can't be replicated. We are further strengthening our network through an integration with Hubble's terrestrial network of more than 90 million consumer smartphones. This builds on Samsara's strong presence on roads, job sites, and in residential areas by extending visibility inside buildings.

To continue the momentum of our Asset Tags, we are introducing the all-new Asset Tag Access a form factor of 5x smaller than our original asset tech. It is purpose built for more compact, high-value handheld tools and specialized equipment, such as gas meters and IV pumps. Equipment managers can now mix and match Asset Tags based on the size and shape of their assets.

Finally, we also introduced the latest generation of our Asset Tag. It has 6 years of maintenance-free battery life, a 50% increase over the previous generation and improved precision finding and range. We're excited to see the growing impact that asset tags are having on our customers' operations. As we close out a fantastic FY '26, I want to thank our customers for their continued partnership and our team for their relentless focus on innovation. We're in the early innings of a multi-decade opportunity to transform the physical world and have never been more excited about the road ahead.

We also wanted to share that our Chief Product Officer, Kiran Saker has retired. Our CTO and Co-Founder, John Bicket; and SVP of Product Management, Johan Land, will take over leadership of our engineering and product organizations, respectively. We thank Kiran for his outsized impact and customer focus, which were instrumental in growing Samsara from an early-stage idea into a multibillion-dollar business.

Lastly, we're excited to announce that we will be hosting our customer conference Beyond 2026 from June 23 to 26 in Las Vegas. We'll also be hosting an Investor Day as part of the event. Beyond is our opportunity to bring together leaders from across industries to discuss the state of physical operations and new ways to deliver value through digitization. We hope you'll join us and are looking forward to seeing many of you there.

I'll now hand it over to Dominic to go over the financial highlights for the quarter.

Thank you, Sanjit. Q4 was another quarter of accelerating growth and improved operating leverage. The quarter was highlighted by strong performance across several key metrics, including year-over-year net new ARR growth in constant currency, the third consecutive quarter of sequential acceleration and the highest net new ARR growth in the past 8 quarters. leading to 30% total ARR growth also accelerating sequentially at a larger scale. 37% year-over-year ARR growth for $100,000-plus customers, the second consecutive quarter of sequential acceleration at a larger scale, and 56% year-over-year ARR growth for $1 million-plus customers, the third consecutive quarter of sequential acceleration at a larger scale.

A quarterly record $13 million plus net new ACV transactions 23% of net new ACV from emerging products launched over the past 2 years and achieving our second consecutive quarter of GAAP profitability. More broadly, our durable and increasingly efficient growth demonstrates the large yet still early opportunity for digital transformation across physical operations.

Looking ahead, we believe we're well positioned to deliver durable growth and create long-term shareholder value for several key reasons. The first is that we have a unique defensible data advantage. By instrumenting physical assets with IoT hardware, we generate a large and growing proprietary data asset that cannot be easily replicated.

Second, we're leveraging this proprietary data to power a closed loop of intelligence and action. We use AI to surface operational insights and deploy AI agents to take action on those insights and automate workflows across the platform. This drives stronger customer engagement and expands the long-term value of our platform.

Third, we have exposure to secular growth in physical infrastructure. Our business model scales with physical assets rather than headcount or knowledge workers and aligns us with end markets benefiting from major initiatives such as the global AI infrastructure build-out. The stock price performance of our top 100 public customers is up more than 30% over the past year.

Fourth, our products offer a differentiated value prop in mission-critical workflows, delivering fast tangible ROI such as accident reduction, fuel and maintenance savings and improved asset utilization, making us essential to our customers' operations. And lastly, we're targeting the large less discretionary operations budget, which represents approximately 80% of our customers' revenue on average.

And because we help them optimize this significant cost base, we have a large opportunity to drive customer impact and long-term growth. Okay. Now turning to our results. Q4 and FY '26 ending ARR was $1.9 billion, an increase of 30% year-over-year, accelerating sequentially at a larger scale. Within that, we added $145 million of net new ARR in Q4, an increase of 33% year-over-year or 31% in constant currency, resulting in the third consecutive quarter of accelerating sequential growth and the highest net new ARR growth rate in the past 8 quarters. Our overall net new ARR in FY '26 was $432 million, an increase of 21% year-over-year, which also accelerated year-over-year at a larger scale.

And FY '26 revenue was $1.6 billion, an increase of 30% year-over-year or 29% in constant currency. Several factors drove our strong top line performance in Q4. First, large customer momentum is leading to higher growth at scale. In terms of large deals, we signed a quarterly record 13 $1 million plus net new transactions in Q4. This reflects the success of our R&D and go-to-market investments to support these larger customer opportunities. In terms of large customers, we ended Q4 with 3,194, $100,000 ARR customers including a quarterly increase of 204, our second highest quarter ever.

ARR from $100,000-plus customers was $1.2 billion, increasing 37% year-over-year resulting in the second consecutive quarter of sequential acceleration at a larger scale. $100,000-plus customers represent 61% of total ARR, up from 58% 1 year ago and 56% 2 years ago. Additionally, ARR from $1 million-plus customers increased 56% year-over-year, representing the third consecutive quarter of sequential acceleration at a larger scale. Consistently over time, our ARR mix from large customers has increased, while ARR mix from smaller customers has decreased.

To better reflect this trend and align with our capital allocation strategy, we're refreshing our definition of core customers to include customers with more than 25,000 in ARR versus [ 100 ] previously. At the end of Q4, [ 250-plus ] customers contributed 85% of total ARR, up from 83% 1 year ago and 81% 2 years ago. We expect this trend to continue and believe this update also helps investors better understand our focus on larger customers versus other competitors in the space. Second, our customers are increasingly using Samsara as their mission-critical system of action by subscribing to multiple applications on a single unified platform.

96% of our [ 100k ] ARR customers subscribed to 2 or more products and 69% subscribe to 3 or more. In Q4, 9 of the top 10 net new ACV deals included 2 or more products, 8 of the top 10 included 3 or more products and 6 of the top 10 included 4 more products. In Q4, we had a large win with 1 of the Midwest's largest farmer-owned co-ops, following rapid M&A-driven growth that left data fragmented across systems, they consolidated on Samsara. This customer leverages route planning to digitally access daily orders commercial navigation for safe, compliant vehicle aware turn-by-turn directions and connected workflows to streamline proof of delivery and signatures.

Additionally, Telematics and video-based safety provide real-time visibility to enable proactive protection of drivers and reduce risk. In a pilot, they achieved a 65% reduction in safety events an 85% reduction in speeding events and a 45% reduction in idling time. Strong multiproduct adoption like this helped us achieve our target dollar-based net retention rate of approximately 115% for core customers, both for our prior definition of 100-plus ARR customers and our updated definition of [ 250-plus ] ARR customers. And third, we demonstrated strong execution across several frontiers. In terms of emerging products, 23% of net new ACV in Q4 came from new products launched over the past 2 years, including AI multi-cam, asset maintenance, asset tags, commercial navigation, qualifications, routing, training and workflows.

Emerging products now contribute more than $100 million in ARR, 8 of the top 10 net new ACV transactions in Q4 included in emerging product, 58 transactions in Q4 included more than $100,000 in emerging product net new ACV and Asset Tags ending ARR more than tripled year-over-year. In Q4, we signed our largest ever Asset Tags deal with Total Safety, a leading provider of industrial safety services with over 250,000 assets in the U.S. Total safety is deploying asset tags to track critical high-value safety equipment such as breathing air tanks, eyewash stations and small tools to ensure asset visibility critical to their operations. By digitizing their inventory, they are increasing equipment recovery and helping their customers eliminate the high cost of lost assets.

In terms of end markets, we saw strong momentum across construction, wholesale and retail trade and public sector. Construction contributed the highest net new ACV mix of all industries for the tenth consecutive quarter and had its highest net new ACV growth in the last 7 quarters. Wholesale and retail trade was our second largest vertical in Q4 and contributed its highest net new ACV mix in the last 3 years and public sector FY '26 net new ACV growth accelerated for the third consecutive year, including Q4 wins with the state of New York and Harris County, the third largest county in the U.S.

And in terms of international, 15% of net new ACV came from non-U.S. geographies. Europe ARR growth accelerated for the fourth straight quarter, led by our largest ever European net new ACV deal with Dawson Group, the U.K.'s largest independent asset rental leasing and contract hire company. and Canada had a highest year-over-year net new ACV growth in the last 10 quarters. In addition to driving strong top line growth, we continue to deliver operating leverage across our business as we scale.

In FY '26, non-GAAP gross margin was 78%, up 1 percentage point year-over-year. Non-GAAP operating margin was 17%, up 8 percentage points from 1 year ago. and free cash flow margin was 13% in FY '26, up 4 percentage points year-over-year. Okay. Now turning to Q1 and FY '27 guidance based on FX rates as of January 31.

Our guidance philosophy remains the same and is derisked for potential downside scenarios. For Q1, we expect revenue to be between $454 million and $456 million, representing 24% year-over-year growth or 22% to 23% growth in constant currency. Non-GAAP operating margin to be 15%.

Non-GAAP EPS to be between $0.12 and $0.13. For full year FY '27, we expect revenue to be between $1.965 billion and $1.975 billion, representing 21% to 22% year-over-year growth or 21% growth in constant currency, non-GAAP operating margin to be 19%, non-GAAP EPS to be between $0.65 and $0.69. And we also expect to be GAAP profitable for full year FY '27. We Finally, please see the additional modeling notes in our shareholder letter.

To wrap up in Q4 and in FY '26, we delivered accelerating growth at scale while expanding operating leverage across the board. Looking ahead, we believe we're well positioned to sustain durable and efficient growth because we use hardware to generate a unique defensible data asset we harness with AI to surface operational insights and automatically take action to drive more customer value.

We are aligned with the secular growth in physical operations and markets that are benefiting from major initiatives such as the global AI infrastructure build-out and we deliver large tangible customer ROI with fast 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 Mike to moderate Q&A.

Thanks, Dominic. We will now open the line up for questions. [Operator Instructions] The first question today comes from Matt Hedberg with RBC followed by Keith Weiss with Morgan Stanley.

Can you hear me?

Yes.

Great. And great job this quarter. A lot of positives to pick through here. The emerging product success was certainly a standout reaching 2 really significant milestones. I guess, as you look to the future, and by the way, I think you guys outlined a really, really compelling reason why data is at the core of Samsara and why that is extremely defensive and in fact, offensive in an AI environment.

Can you talk about, though, where you're seeing some of the best adoption rates for some of these emerging products? Is it across all your customers? Is it some of your larger customers, particular verticals? Any sense for just kind of how those emerging products are distributed.

Matt, this is Sanjit. I'll take that one. So I would say we are seeing very strong momentum, especially with large customers because they have the most complex physical operations thousands of in tens of thousands of frontline workers and similar, probably a larger number of assets. So when we introduce new technologies like commercial navigation, maintenance, training, they're very well received because they know immediately how to put that technology to work. So I would say if I had to choose a pattern, it would be among these larger customers where they're set up to absorb these new products.

The next question comes from Keith Weiss with Morgan Stanley, followed by Alex Zukin with Wolfe.

Congratulations on a really outstanding quarter and into year year. really 2 questions I want to ask 1 more tactical, 1 more strategic. On the more tactical side of the equation, the acceleration that we've seen over the past couple of quarters in net new ARR. Is it too simple to say that this is sort of asset tags and that new solution ramping up within the product portfolio?

Or is there like a broader set of drivers that are behind that acceleration? And then on the more strategic side, coming out of the Morgan Stanley TMT Conference. We've been talking a lot about proprietary data. And 1 of the debates that emerged is the, how the value of data sustains over time? And I'd love to hear your guys' view on it in terms of the relative value of the data when it's brand new and it's just coming off of the devices versus how much value it retains as it becomes older and older and becomes part of that like bigger data set that you have over time?

It's Dominic. I'll go for the first 1 and then Sanjit can take the second one. I think the acceleration, the net new ARR acceleration over the last 3 quarters has been much broader than something just simply as asset tax. I think broadly as a bucket, the emerging products have definitely been a big contributor. So going from 8% of the net new ACV mix in Q2 to 20% in Q3 and then it's 23% in Q4.

Asset Tags has been important within that. But once again, we didn't see 1 product within the emerging products driving more than 50% of that contribution. I think it's been a lot of large customer momentum and success. Again, a quarterly record $131 million plus net new ACV transactions, our second highest quarter ever of 100,000-plus ads.

We're seeing good momentum internationally. And then in specific verticals, again, things like construction and wholesale and retail and public sector this quarter were all strong. So emerging products definitely playing a role, but it's been -- the strength and the growth has been much more broad than that.

And Keith, on the proprietary data angle, we think there's a lot of value in the sort of accumulation and really the data asset that builds up over time. And I'll give you 1 or 2 just kind of concrete examples. Maintenance is actually 1 that our customers have really started taking to. We have a tremendous amount of information about what happens with the specific make model year of a truck. So for example, if you have a 2020 Freightliner Cascadia, how does it wear over time? What have others seen? Where does it start to break down? Where does the maintenance cost go up? That is from the accumulation of a lot of data over time.

The same philosophy applies to things like risk data. You want to understand how millions of drivers over different weather conditions over time, different tenures of their company and different risk patterns behave. So it's not just in the moment data, that's, of course, valuable, but it's really being able to look at it over time and across customers, that's where it accumulates to be something really interesting.

The next question comes from Alex Zukin with Wolfe Research, followed by Michael Turrin with Wells Fargo.

Yes, I echo my congratulations on really, really strong quarter. Maybe first 1 for you, Sanj, just the AI offering that you launched the Agentic offering. Maybe just help us understand a little bit of how you plan to monetize that within your customer base and kind of how -- I think listed a few that are on the maybe horizon.

Maybe talk to us a little bit about your vision for introducing that type of functionality and maybe how the pricing evolves around that. And then Dom, it's your largest net new ARR beat as a public company. Despite the conservatism you always embedded in the guidance, I think we're starting with a 2 percentage point expansion on a larger scale, implying the largest starting incremental margin guidance for a fiscal year guide. So maybe walk through kind of just the momentum that you're seeing in existing and new customers that gives you that confidence to embed that sales efficiency to start the guidance.

Sure. I'll start with the agentic question. So AI agents are sort of new concept to the world and very new in the world of our customers. We are getting these products out there to understand better how they're going to use the agents how often they're used the patterns and so on.

And that will give us the data we need to figure out the right pricing model. both is a fair share of value but also matches how the customers use the product. So we'll have more to come there. We'll really get these out there starting in the summer with Beyond. And we are excited, not just about the safety agent, but also the maintenance compliance and the other sort of virtual team members we can add to our customers' teams.

Yes. And I would say that we've -- again, Q4 was fantastic, but we've really had 3 consecutive quarters now of accelerating net new ARR growth. And so a lot of great momentum, obviously, to end FY '26 and then taking us into FY '27. I think not only have we demonstrated a lot of accelerating growth, but we've also done so by getting more efficient, again across the board. And so we're finding ways to operate more efficiently. We're using a lot of AI tools internally to drive a lot more productivity. Even looking at something as simple as like ARR per employee, that has increased every year over the last several years, I think it's like up like more than 30% over the last 3 years.

And so we're able to drive a lot more top line scale while doing so much more efficiently. And that gives us confidence that we can continue to do that into FY '27.

The next question comes from Michael Turrin with Wells Fargo, followed by Matt Martino with Goldman Sachs.

Echo my congrats as well. The 4Q results are really impressive even for Samsara in Q4. So the first question is just, you got a lot of rich detail in there, but just help us understand where the sources of upside came from? And if anything at all, surprised you relative to what you're expecting? And as sort of the second part to that, just how that shades what you're framing to us for fiscal '27 as well done.

Yes. Again, as I -- we just kind of talked with Alex a third consecutive quarter of net new ARR acceleration, strongest net new ARR growth in 8 quarters. And then -- and so much net new ARR acceleration that the overall $1.9 billion of ending ARR accelerated back up to 30%. Again, large customers, a lot of large deals, the record 13 $1 million-plus transactions and then the 200 and 400 0-plus adds was was very strong.

I think tied into the emerging products, we're just seeing much larger multiproduct transactions. So 9 of the top 10 deals, 2-plus products, 8 of the top 10, 3 plus and then 6 of the top 10, 4 plus. So a lot of multiproduct strengths driving the growth. And then we're getting contribution from these emerging frontiers, whether it's the emerging products at 23%, international or again some of these verticals. And so 3 consecutive quarters, I'd say, of acceleration and a lot of growth strength, and that gives us a lot of good momentum going into '27.

Congrats again.

Next question comes from Matt Martino with Goldman Sachs, followed by Matt Bullock with BofA.

Sanjit, for you, Asset Tags clearly feels like something much bigger. So as you introduce the excess form factor, bring in Hubble to extend the network, how should we think about the strategic end state there? Is this mainly about driving deeper adoption within the base? Or does this really start to open up an entirely broader asset visibility platform for you guys?

Yes, Matt, I would say it's definitely both. The world of physical operations has a ton of assets. There's, of course, vehicles and trailers and construction equipment, but I mentioned a lot of the smaller handheld assets, there's tools, there's dollies and so on.

So really, our first priority here is, like I said, with Phase 1, we're just simply trying to digitize and get this information into the cloud so we can start operating on it. As we do that, I think it does open up a lot of interesting use cases. Many of our customers are interested in things like asset dormancy, which piece of equipment haven't moved, maybe they don't need to own them and they could rent them instead there are definitely sophisticated ways to kind of load balance where those assets are placed.

And then I do think there's this agentic opportunity. All of that will appeal to our existing customers. And I do think this will open up some new possibilities of maybe some customers that don't have a tremendous number of vehicles, but have a lot of other kinds of field assets. We highlighted total safety, for example, they have about 250,000 assets. That will be a good example of one.

Great. The next question comes from Matt Bullock with BofA, followed by Derrick Wood with TD Cowen.

Sanjit, I wanted to ask about the public sector. Annual net new ACV growth accelerated for the third consecutive year here. It's now a $100 million plus ARR business that's pretty clearly benefiting from network effects. My question was about legislation or the policy environment. We noticed that Samsara presented to Congress twice during February. What was that about specifically? And are there any kind of legislative tailwinds that we should have on our radar as we enter fiscal '27?

Yes, absolutely. So we are very excited about momentum in the public sector. Just as a reminder, the public sector, they have a lot of physical operations that are required to maintain and really run all of our communities. There -- a lot of the reason that we're providing so much information in Congress is simply to educate. We want them to understand the benefit of these technologies, not just in the public sector, but even in the private sector, our products have a huge impact on safety, on efficiency, and it's part of this bigger digitization trend.

So there, I would say the work has really been around kind of education, first and foremost. And then in the public sector itself, I think we are seeing some great network effects, as you highlighted, cities and states that are not competitive with 1 another. So when you unlock value for one, they tend to talk about it and tell others about it.

That's fantastic. And if I could squeeze 1 more in for Dom, if I could. Obviously, the large deal momentum was excellent in 4Q. But I wanted to ask about helping frame the contribution from large deals that were ramping from 2Q and 3Q? Just helping us understand kind of what the contribution was from prior deal momentum in 4Q given the pretty huge net new ARR number.

Yes. Most of the Q4 performance and results were driven by new deals booked and signed in the quarter. The -- I assume the 1 that you're referring to in Q2 is the first student transaction. That was a large deal that we signed in Q2 and is a phased rollout. And so we got some of that contribution in Q4 will continue to be rolled out over time. But most of the bookings and ARR, the net new ARR in Q4 were the result of new deals, whether they are expansions to existing customers or signing new customers, but that were booked in the quarter.

The next question comes from Derrick Wood with TD Cowen followed by Jim Fish with Piper Sandler.

Great. My congrats as well. I guess, Sanjit, just going back on vertical discussion, construction, 10th sequential or 10th quarter in a row of strength outsized. How much of that is being driven by physical AI data center infrastructure build-out? And what are some of the other drivers? And then just -- I mean, given the projected tens of gigawatts of data center capacity expected to be stood up over the next couple of years, are you -- can you just talk about the strength of your pipeline, not only in construction but those other verticals, energy, utilities, field services that are tied to data center builds.

Sure. So Derrick, Construction was absolutely another strong vertical for us this quarter. I would say that a significant number of our customers are involved in this AI data center build-out, but they're also helping build and maintain roadways and buildings and kind of all the infrastructure that powers the planet. So while it has been a kind of tailwind in general in the construction industry, there are a number of different sort of areas of interest there.

But on the utility side, we see electrical utilities, other trades. We work with a lot of electrical contracting companies, for example, they are all involved in this AI data center build-out. So it's really been an interesting kind of macro tailwind or effect in that industry. But at the adjacent industries, as you highlighted, utilities and field services, too.

Great. And if I could squeeze 1 for Dom, speaking of macro. I -- We have been getting questions on whether the rise in memory prices would have any impact on your margins or cash flow or supply chain dynamics or anything that flagged to think about potential impact on the model?

Yes. We're definitely seeing some increase in memory for us. It's more on the storage side. more on the NAND side than on the memory side. I think we've operated through different supply chain disruptions. We have a very kind of nimble supply chain team that's really well prepared to kind of handle and navigate the current dynamics. We kind of went through something similar in 2022.

And I think most importantly, we were able to meet all customer demand while driving free cash flow leverage, and we feel like we're in a similar position now we factored this into the -- in the modeling notes and the gross margin and the 100 basis points of free cash flow leverage that we started with in the notes.

I think, also something that we think about it from a competitive standpoint, we think that we're best positioned and best capitalized to navigate through this. This could be an opportunity for us to increase more market share and then ultimately, we obviously think that the prices are going to stabilize over time, and we don't see any long-term structural changes to our financial profile.

The next question comes from Jim Fish with Piper Sandler, followed by Alex Sklar with Raymond James.

Thanks for the question here. Look, I think a lot of people here are impressed by the emerging product side of things. Dom, another quarter north of 20% here. It seems like this is starting to become the new norm. I guess, how are you guys thinking about it for the annual guide here? And was it fairly balanced again or a few few of the products underneath starting to lead a little bit more. And Sanjit, just for [indiscernible] a customer-driven ask? Or why this version? How should we think about capability difference or pricing difference?

Yes. From the emerging products side, very similar to the previous quarters. It was very widespread. There wasn't 1 of the kind of emerging products that drove more than 50% of the bookings. And so we saw pretty broad-based strength, and we have good momentum across all of those products going to '27.

Yes. And in terms of Asset Tag excess, it very much was customer-driven. Customers tried the original Asset Tags. They really like the functionality. Many of these customers, they have smaller, often handheld tools where they needed something that basically had less volume. So that's where that ask came from, and that's why we built excess. The pricing is similar to the original Asset Tag family. It's really the form factor that's different.

The next question comes from Alex Sklar with Raymond James, followed by Peter Berkly with Evercore.

This is Jonathan McCarrey on for Alex. So Sanjit, I'll start with you. You guys called out success in Europe again this quarter. So I wanted to think ask how you're thinking about resourcing to that region as we head into fiscal '27. And then conceptually, how much of a priority is geo expansion over the next few years?

And then tangentially for Dom, I wanted to ask on the hiring embedded in the outlook for the year. continued success in Europe, but you're also seeing product velocity that seems like it continues to pick up. So curious where you're adding more manpower across the business? And then which areas are driving the leverage embedded in the guide.

Yes. I'll take the first part of that. So we're, again, very pleased with the progress in Europe. Dawson Group [ petite for SDA ], Fraga. These have all been huge lands for us are very well-known companies in the geo. So I think it's just going to be continued investment and effort. We're planning to just be consistent there.

And we're making the product investments that are required as well in terms of the features and functionality that are required. But if we take a step back, we play in some of the most important geographic markets today between North America and Western Europe. So I think it's really about to follow through and really helping digitize these large-scale operations. We still have a long way to go, which we're excited about.

Yes. And then on the hiring front, I touched on this a little bit earlier. But again, we expect FY '27 is going to be another year of productivity improvements. I use the stat that over the past 3 years, the ARR per employee is up more than 30%. We expect it will increase again in FY '27. Most of the hiring in FY '27 will be in our go-to-market and sales-related roles. Most of the other functions are going to be roughly the same size, maybe some smaller, which we expect will drive leverage across all of the OpEx line items.

. The next question comes from Peter Berkly with Evercore followed by Jackson with William Blair.

This is Pete Burkly on for [indiscernible] on a really strong quarter here. So just want to sort of focus in on, again, on the large customer segment and really strong growth and acceleration, the $100,000 ARR segment and the $1 million-plus segment as well. So I'm curious if you could just sort of unpack some of that strength, whether it's primarily multiproduct attach some of the emerging products like Asset Tags and AI Multicam or if you're just seeing a broader fleet and asset expansion sort of underneath those and some of those larger customers.

And then just curious how much runway sort of remains to continue to expand ARPU within that really large large ARR customer base.

Yes, I'd say on the large customers, it was weighted a little bit more towards existing customers doing expansions, multiproduct adoption across the board definitely drove strength. And again, almost all of those licensing the core kind of vehicle-based products, telematics and video by safety.

But as I said, things like 8 out of the top 10 had 3-plus products and 6 of the top 10 at 4 or more. So licensing something outside 1 of these emerging products, which is also quite strong for us. And similarly, even on the new logo side, the new customer lands, the large ones, all had or multiproduct transactions out of the gate.

The next question comes from Jackson with William Blair, followed by Jason Celino with KeyBanc.

This is Jackson on for doing [ Becker ]. We've talked about the substantial data set. We have more than 25 trillion data points on the platform. Large customers are doing more. There's more products in earlier stages of development and adoption altogether, I was curious if you could speak to how all of these things really allow you to accelerate the time to value with customers and really support the already considerable value proposition that you guys offer customers?

Yes. I think, first of all, we're excited to be able to expand the platform. This really expands areas of value more than anything else. So for example, with maintenance, that was something weren't doing as much in before, but it's a tremendous area of expense for our customers who have a lot of assets. Time to value continues to be strong.

Our customers realize this ROI within a year. So that's never really been an issue of like how do we speed that up. I'm excited about helping just kind of drive that already 8x ROI that we see with customers even broader as we expand into kind of more adjacent areas like maintenance, training, qualifications, workflows and so on.

Got it. That's super helpful. And then 1 more quickly, if I could. There's a lot of geopolitical turmoil going on in multiple regions. How should we think about the impact to the business' international expansion plans? Like would you even say the heightened uncertainty may provide a tailwind or headwind to potential adoption? I'm just curious any color you guys would have on the current macro landscape.

I think it's -- for us, again, as I said on an earlier question, we're pretty focused on North America and Western Europe. There's 35 million commercial vehicles here in North America. There's 45 million in Western Europe. So we feel that the markets we're selling in are ready for this kind of digital transformation, they're adopting these technologies. So we're going to stay focused in the geographies we're in.

Great. Next question comes from Jason Celino with KeyBanc, followed by Nick Altmann with BTIG.

Maybe my first one, I think it was mentioned that you have 40 different AI detections I don't know if this is a new way to frame it, but how many of these are powered by like AI-type models? Or can they be powered by kind of the same models. And then when we think about the categories of some of these detections, are they more than just safety-based detections.

Sure. So these are all different forms of AI detection. Some of them involve technologies like large language models, others or kind of more time series based models. So we are continuously expanding the library of types of detections. And safety is, of course, an important area for these detections, but are thinking about AI models much more generally.

So we look at things like weather conditions and road conditions. We're looking at other kind of health vehicle and asset health related AI models. So we're continually expanding, but they build on a number of different technologies.

Okay. Great. And then maybe just a quick 1 for Dom. SPC philosophy. I know you're guiding to GAAP full year profitability, which is refreshing. But maybe refresh us on how you're thinking about SBC as a whole and its trajectory.

Yes. We view equity-based compensation as a real cost of the business. We forecast that we're driving leverage. I think we were in the kind of the high 20s 4 years ago, when we went public. We got it down into that low 20s last year in FY '26, the 10-K will come up earth in the press release, but it was 20%, we'll be below that again in FY '27 and expect it to go down even further from there.

So this is a big area of focus for us. and pleased that we were able to get to GAAP profitability now for 2 consecutive quarters. I think it will probably go a little bit negative in Q1, where we tend to spend a little bit more money, not on the SBC side, but on the OpEx side. but then we've got a path to getting it to positive for the full year.

The next question comes from Nick with BTIG, followed by Mark with Loop Capital.

You mentioned you doubled the network density, and that is enabling you guys to detect the asset tags in near real time. So can you just talk about how much of an unlock those new real-time detection capabilities could be for both customers who are looking to adopt asset tags or even existing asset tags customers who are potentially looking to expand their footprint.

Yes, absolutely. So the network density is an interesting 1 because it lets us basically increase the frequency and fidelity of the data we're getting back. This is especially helpful in a scenario like [indiscernible] . A lot of these assets get lost or sold, and they walk away from job sites and so on. So customers are looking to go recover those. They need to know where they are if they're moving and so on. So it definitely helps there.

And then we also embed this technology in other areas like our worker safety wearable. And so even if someone is not near a vehicle, we're able to help keep them safe outside of the cap. So for field services workers, for example, this is a helpful technology. So I think it just increases the number of applications we can address from kind of basic asset tracking, doing much more fine-grain analytics on these assets because we get much more frequent data updates.

The next question comes from Mark with Loop followed by Andrew with BNP.

Congrats on the strong quarter here. Sanjay, typically at the start of the year is when software companies will adjust their sales orgs and the go-to-market strategies. I was wondering if you're planning any meaningful changes on the sales front in the coming year.

No. I would say, Mark, we're always looking at efficiencies, trying to make sure we're approaching the market in the best way possible. We're very happy with our structure, nothing significant to report there. I don't know, Dominic, if you want to add anything?

I think more like evolutionary changes. And so having kind of more global account specialists for these like larger multinationals, we're experimenting and we'll make more investments in things like product sales specialists to cover all of these emerging products, but nothing hugely structurally different going into FY '27.

Our next question comes from Andrew with BNP followed by Junaid with Truist. Andrew? Okay. Let's pass there. Okay. Our last question today comes from Junaid with Truist.

Great. Given the scale of your network now and with offerings like AI Multicam, 360, real-time weather intelligence. How do you see these capabilities, positioning the platform as fleets begin adopting higher levels of autonomy. And how should we think about the monetization potential of that proprietary data in an autonomous future context?

Yes. From our perspective, autonomy is an exciting technology. It's been on the horizon for some time, and it's starting to come to fruition on the consumer side at least. We kind of view operations as a whole. So autonomy is an add for us. We're going to start seeing autonomous vehicles and devices appear in our customers' operations at some point.

We do think that will help expand the number of types of asset -- number and types of assets and the applications we address. So you're going to see more workflows, more automation happening where people and these autonomous vehicles are working together. We don't have plans to take this video data and sell it to the autonomous providers or anything like that. But for us, we're really just tracking it as more of a technology.

All right. So this concludes the question-and-answer portion. Thank you all for attending our Q4 fiscal year 2026 earnings call. Before I let you go have a few short announcements.

We'll be attending the Loop Capital Markets Conference on March 10 and the Wells Fargo Symposium on April 8. We'll also be hosting the William Blair Bus Tour on March 16 and the Goldman Sachs Bus Tour on April 13 in San Francisco. We hope to see it 1 of these events.

Finally, we are hosting our Investor Day, as Sanjit mentioned, this June in Las Vegas. Please send an e-mail to [email protected], if you're interested in attending in person. For those who prefer to attend virtually our IR website will have a link to a live broadcast. That's it for today's meeting. If you have any follow-up questions, you can e-mail at [email protected]. Bye everyone.

[Presentation]

Good afternoon, and welcome to Samsara's Third 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, 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. Actual results may differ materially from those contained in the forward-looking statements and are subject to risks and uncertainties described more fully in our SEC filings. Any forward-looking statements that we make on this call are based on assumptions as of today, December 4, 2025, and we undertake no obligation to update these statements as a result of new information or future events unless required by law.

During today's call, we'll discuss our third 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'll only provide constant currency commentary when there's a 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 up for Q&A. With that, I'll hand over the call to Sanjit.

Thanks, Mike, and thank you, everyone, for joining us today. Samsara delivered another strong quarter of durable and efficient growth. We ended Q3 with $1.75 billion in ARR, growing 29% year-over-year. We also achieved our first quarter of GAAP profitability. In Q3, we added 219 customers with $100,000 plus in ARR, a quarterly record. Our $100,000-plus ARR customers now contribute more than $1 billion of ARR, growing 36% year-over-year. We also added 17 $1 million-plus ARR customers tied for a quarterly record.

Our growth is driven by our strategy to partner with the world's largest and most complex operations organizations. Q3 was a milestone quarter for large customers, and we partner with many new organizations, including the state of New York, one of the world's largest providers of oilfield services and one of the world's largest and most diversified media corporations. We're proud to partner with these industry leaders, driving safer and more efficient operations together.

Large enterprises are quickly digitizing their operations, and they're demanding a partner that delivers scale and performance. We've become their platform of choice for a few key reasons. First, we unified data from many disparate systems across all their vehicles, equipment and frontline teams in a single system of record. Second, we solve challenges across their operations with our broad multi-application platform. Third, we use our massive data asset and AI to deliver actionable insights that save our customers money. Fourth, we provide an enterprise-grade platform that delivers the scalability, reliability and security our customers require. And lastly, we provide world-class support and expertise to help our customers drive change management and deliver outcomes, resulting in clear and fast ROI.

I'd like to share 2 stories of new customers from Q3 that are using Samsara to transform their operations. The first is in student transportation, which is a complex and highly regulated network responsible for the safe transit of 26 million students every day. After landing First Student, the largest school bus provider in North America, in Q2, we partnered with another 1 of the top 5 largest school bus providers in Q3. They transport over 1 million students today in more than 500 school districts across 30-plus states and provinces. Their initial purchase included our Video-Based Safety, Telematics and AI Multicam products. They're looking for a highly accurate and reliable AI solution to enforce their 0 tolerance policy on driver mobile use and eliminate in-cab distractions and driver drowsiness. With Samsara, they'll be able to detect, alert and reduce these behaviors.

The second example is with one of the largest mechanical contractors in the U.S. They have over 5,000 employees specializing in custom HVAC and plumbing systems for commercial and industrial projects. They help build major sports stadiums and critical medical and research facilities, and they also design and install the complex systems that power many modern data centers as part of the AI infrastructure build-out. The company is using our Video-Based Safety, Telematics, Connected Training and Driver Qualification products to ensure their complex field operations remain safe and efficient. In their pilot with Samsara, they saw a 44% reduction in the total safety event rate and a 72% reduction in mobile usage. We're proud of the impact we're creating together, and we're excited for the decades-long opportunity ahead.

Physical operations are the mission-critical infrastructure to keep the world running, representing over 40% of global GDP. These asset-heavy and labor-intensive organizations typically spend around 80% of their revenue on labor and assets. Running these complex operations carries significant inherent risk, from driving large commercial vehicles carrying hazardous materials to deploying frontline workers for services to operating heavy machinery.

Unfortunately, a frontline worker dies from a work-related injury approximately every 99 minutes in the U.S. We help our customers protect their workers and support their top safety goals that have a material impact on their financials, brand and talent. This work is critical because accidents and noncompliance directly translates to substantial financial costs, including higher insurance premiums and large payouts. And these costs are increasing with the rise of large nuclear verdicts and accident litigation.

Our customers also care about protecting their reputation to maintain a competitive edge, which can be hurt by a weak safety culture or history of incidents. And lastly, employees stay with companies that demonstrate their commitment to keeping them safe, which is important in a tight labor market.

As we look ahead, we see a huge opportunity for AI to transform safety coaching and more broadly, automate coaching across operations. This will help our customers scale their coaching programs without adding more head count.

We recently added -- we recently launched new AI-powered coaching features: Automated Coaching, Group Coaching and Workflow Automations. Starting with Automated Coaching. This is the first advanced automated coaching to help with the entirety of the driver experience, including safety, compliance, idling and more. Coaches can quickly create their own digital doubles or use premade avatars to create tailored coaching videos for each worker.

Next, Group Coaching helps managers recognize and coach front-line workers in group settings using operational data. It uses AI to generate ready-to-use coaching session that highlights positive recognition, fuel efficiency, compliance and safety.

Last, Workflow Automations is a no-code workflow builder that uses our data asset to streamline coaching and training processes. It allows for the intelligent management of compliance and safety programs, automatically directing lower priority events to the driver for self-review while ensuring that high priority incidents are flagged for manager coaching. We're excited to introduce these new AI-powered features for our customers.

All of our innovation is translating to real-world customer impact. We recently released our safety report, which analyzed data from over 2,600 Samsara customers operating medium and large fleets. Fleets using are dual-facing AI dash cameras, real-time in-cab alerts and driver coaching saw an aggregate 37% reduction in accidents after the first 6 months, and this increased to a 73% reduction in accidents after 30 months. These are life-saving outcomes that show our platform is transforming safety culture and demonstrating measurable results for our customers.

Now I'd like to turn to the international growth opportunity. I've met with dozens of customers in our international markets this year. Every time I meet with them, I'm inspired by the long-term opportunity to expand our impact. There are a few reasons for this. First, the international market is very large. There are more assets and frontline workers in Europe, Canada and Mexico than in the U.S. Second, the international market is less penetrated than the U.S. and earlier in its digitization journey. Third, we believe the opportunity for impact and customer ROI is similar to the U.S. These customers are achieving similar savings from insurance payouts and premiums, fuel costs, improve worker retention and asset utilization.

Over the last few months, we hosted our annual Go Beyond customer events in London and Mexico City. During these events, we brought together hundreds of local customers and prospects to share new product innovations and best practices across the community. At Go Beyond U.K., we announced a new feature for our European customers, Samsara Smart Compliance. This helps fleet use in-cab audio alerts to prevent costly driving time infringements before they occur. Both of these events were a great opportunity to hear our customers' top operational challenges and continue the feedback loop.

We've also continued to strengthen our ecosystem through industry-leading partnerships in the U.K. and Mexico. This quarter, we announced a new partnership with Allianz, one of the largest general insurers in the U.K. This partnership gives Allianz insured commercial customers preferred access to Samsara's AI safety cameras and our connected operations platform.

Also, building on our successful relationship with Element Fleet Management, we extended our partnership to the Mexico market. Together, we are providing organizations with an integrated full life cycle solution that drives down operational costs and enhances safety and efficiency in the region. We're excited about the impact we're making for our customers every day, transforming their operations to be safer, more efficient and more sustainable. We're just getting started and look forward to the multi-decade opportunity ahead.

We're also proud that our long-term growth potential was recognized by Fortune this quarter, ranking us seventh on their Fortune Future 50 list. We want to thank all of our 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. Q3 was another quarter of durable growth and improved profitability. The quarter was highlighted by strong performance across several key metrics, including 23% year-over-year net new ARR growth in constant currency, our highest growth rate in the past 7 quarters; 219 $100,000-plus ARR customers added, a quarterly record; and 17 $1 million-plus ARR customers added, tying a quarterly record; 8 $1 million-plus net new ACV transactions in Q3, also tying a quarterly record; 20% of net new ACV from emerging products launched since last year; and achieving our first quarter of GAAP profitability.

More broadly, our durable and increasingly efficient growth demonstrates the large yet still early opportunity for digital transformation across physical operations. Looking ahead, we believe Samsara is well positioned to deliver durable growth and create long-term shareholder value for several key reasons.

First, we have a unique defensible data advantage. By instrumenting physical assets with IoT devices, we generate a large and growing proprietary data asset that cannot be easily replicated or sourced elsewhere. Second, AI is accelerating our innovation, enabling us to release new products and meaningful features at a faster pace, driving higher customer engagement and usage. Third, our business model scales with fiscal assets rather than head count or knowledge workers and aligns us with end markets poised to benefit from major initiatives such as the global AI infrastructure build-out.

Fourth, our products have a differentiated value prop and mission-critical workflows, delivering fast, tangible ROI and quick payback periods that make us essential to our customers' operations. 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 the significant and durable cost base, we have a large opportunity to drive customer impact and long-term growth.

Okay. Now turning to our results. Q3 ending ARR was $1.75 billion, an increase of 29% year-over-year. Within that, we added $105 million of net new ARR, an increase of 24% year-over-year or 23% in constant currency, resulting in the second consecutive quarter of accelerating sequential growth and the highest net new ARR growth rate in the past 7 quarters. And Q3 revenue was $416 million, growing 29% year-over-year.

Several factors drove our strong top line performance in Q3. First, large customer momentum is leading to higher growth at scale. In terms of large deals, we signed 8 $1 million-plus net new ACV transactions in Q3, tying a quarterly record. This reflects the success of our R&D and go-to-market investments to support these larger customer opportunities. At the same time, these larger deals have inherently longer and less predictable sales cycles, which could introduce more variability into our quarterly ARR results than in the past.

In terms of large customers, we ended Q3 with 2,990 $100,000-plus ARR customers, a quarterly record increase of 219. ARR from $100,00-plus customers exceeded $1 billion, increasing 36% year-over-year, resulting in accelerating sequential growth at a larger scale. $100,000-plus ARR customers now represent 60% of total ARR, up from 57% 1 year ago. We also ended Q3 with 164 $1 million-plus ARR customers, tying a quarterly record increase of 17, $1 million-plus ARR customers contributed more than 20% of total ARR, and year-over-year ARR growth from this cohort accelerated sequentially for the second consecutive quarter at a larger scale.

Second, our customers increasingly utilize Samsara as a system of record for physical operations by subscribing to multiple applications on a single unified platform. Over 95% of our $100,000-plus ARR customers subscribe to 2 or more products, and approximately 70% subscribe to 3 or more products. In Q3, 10 of the top 10 net new ACV deals included 2 or more products and 9 of the top 10 included 3 or more products. In Q3, we signed a large expansion with one of the world's largest home improvement retailers.

In the quarter, they increased their total licenses for video-based safety, vehicle telematics and Connected Equipment after achieving significant ROI, including a more than 50% reduction in total auto liability claims by leveraging Samsara's AI detections. In Q3, they also added Connected Workflows to digitize and streamline operational processes for vehicle life cycle management and driver activities, covering everything from preventative maintenance and incident review to vehicle disposal and ride-along compliance. As a result of our strong multiproduct adoption, we achieved our target dollar-based net retention rate of approximately 115%.

And third, we demonstrated strong execution across several frontier markets. In terms of emerging products, 20% of our net new ACV in Q3 came from our new products launched since last year, including AI Multicam, Asset Maintenance, Asset Tags, Connected Training and Connected Workflows. 34 transactions in Q3 included more than $100,000 in emerging product net new ACV. 8 of the top 10 net new ACV transactions included an emerging product, and Asset Tags ARR grew more than 400% year-over-year.

Also, Q3 included our largest ever Asset Tags deal with a global leader in chemistry solutions and engineered equipment for the oil and gas industry. The company manages thousands of reusable chemical totes but has historically lacked visibility into where these high-value assets are deployed, how long they remain at customer sites and overall inventory levels. By adopting Samsara's Level Monitoring Asset Tags, they'll gain real-time visibility for the first time, unlocking the ability to improve their tote fleet efficiency by 25% and through the elimination of excess inventory and more efficient utilization. Additionally, the customer expects to cut the manual labor required for quarterly inventory checks by more than 90%, driving immediate productivity gains and significant cost savings.

In terms of end markets, we saw strong momentum across construction and public sector. Construction contributed the highest net new ACV mix of all industries for the ninth consecutive quarter and public sector contributed its highest ever net new ACV mix with wins across Texas, New York, Massachusetts and Chicago.

Also, public sector net new ACV grew approximately 100% year-over-year, its highest growth rate in almost 3 years and crossed more than $100 million in ending ARR. And in terms of international, 16% of net new ACV came from non-U.S. geographies. Europe contributed its highest ever quarterly net new ACV mix, and year-over-year net new ACV growth in Europe accelerated for the second consecutive quarter, resulting in its highest growth rate in the last 7 quarters. And as a result, Europe's overall ARR growth rate also accelerated for the second consecutive quarter.

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 Q3, a slight increase year-over-year. Non-GAAP operating margin was a quarterly record 19%, up 9 percentage points from 1 year ago, and free cash flow margin was 13% in Q3, up 4 percentage points year-over-year.

Okay. Now turning to guidance based on FX rates as of November 1. For Q4, we expect revenue to be between $421 million and $423 million, representing 22% year-over-year growth or 21% growth in constant currency; non-GAAP operating margin to be 16%; and non-GAAP EPS to be between $0.12 and $0.13. For full year FY '26, we expect revenue to be between $1.595 billion and $1.597 billion, representing 28% year-over-year growth; non-GAAP operating margin to be 16%; and non-GAAP EPS to be between $0.50 and $0.51. And finally, please see the additional modeling notes in our shareholder letter.

So to wrap up, in Q3, 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, helping 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 line up for questions. [Operator Instructions] The first question today comes from Michael Turrin with Wells Fargo, followed by Alex Zukin with Wolfe.

Sanjit, the large customer momentum, really standing out the past couple of quarters here. Can you just speak to what's enabling that from a product perspective and how significant a competitive advantage that is becoming for Samsara here?

Sure. So we've been investing in the sort of scale and security and infrastructure needed to serve large customers for a number of years, both on the R&D and the go-to-market side. I would say on the product side, it's our ability to just manage these massive amounts of data, also customize the product to the needs of these large complex organizations and their org structures. And then on the go-to-market side, we really operate as a true partner to these companies, understanding their business, figuring out how to unlock the most value for them, and then we tailor the use of the product to meet those needs. I think the combination of those 2 has been the big unlock, and we're seeing it come through in the numbers now.

Just to follow on, Dom, I know it's early, but you have a fairly good level of visibility in this model. Is there any high-level commentary you're willing to give us on fiscal '27 that's just helpful as we're rolling through some of the results from the rest of the year here?

Yes. So look, yes, we're not in a position obviously to give formal guidance for next year. Q4 tends to be our seasonally largest quarter, and so we really need to get through the next couple of months before we finalize our FY '27 plan. I will say that based on our current outlook, I would expect that our initial FY '27 revenue guide in terms of the dollars will be higher than where current consensus is right now just given the Q3 outperformance.

The next question today comes from Alex Zukin with Wolfe Research, followed by Keith Weiss with Morgan Stanley.

Sanjit, maybe for you. The contribution from new products, that jumped to 20% of net new ACV from 8% last quarter. Maybe just dig a little bit deeper of kind of what went better or what's outperforming your expectations to drive that kind of inflection. And then I've got a quick follow-up.

Sure. So we launched a number of new products at the customer conference earlier this year, and I think it took a few months for customers to trial them out, see how they worked. And it's been great to see the contribution early on from these new products. So that 20% up from 8%, I think, reflects growth across a number of different products. So it was no single product but really kind of balanced across a number of different products.

Perfect. And then, Dom, maybe for you. It's a little bit -- it's great and rare to see sequential growth in net new ARR for you guys in a Q3, particularly given some of the mechanics around some deals pushing out from 1Q to 2Q. So maybe can you just highlight like what drove that strength? Maybe comment on the First Student deal. Was that more impactful in Q2 or Q3? And anything else that we should keep in mind?

Yes. Thanks. So yes, so Q2, obviously, we talked about this 3 months ago, and we had the benefit of some of the deals from Q1 that slipped into Q2, and we closed those in May at the beginning of the quarter. And so we called that out last quarter.

In terms of First Student, that was a deal that we signed in Q2. It's going to be a phased rollout. So the ARR will be added over time. That's very common for our large deals to do these phased rollouts. We actually added more ARR from that deal in Q2 than we did in Q3, so it really wasn't much of a contributor to this quarter.

Q3 was really driven by things like the record number of large customers that we added, both $100,000 and $1 million plus, we tied the quarterly record again for $1 million-plus net new ACV transactions, all of the emerging product strength that Sanjit just mentioned and in some of the industries like construction, public sector, Europe, all of those contributed to a really strong quarter.

Congrats, guys.

The next question comes from Keith Weiss with Morgan Stanley, followed by Matt Bullock with BofA.

Congratulations on a really solid quarter. I wanted to dig in on sort of the 20% from emerging products. It seems like with the broader product portfolio that you guys have put out there, now you're seeing traction across multiple products. You're seeing those multiproduct deals really hit. Any sense you could give us on kind of the latent opportunity, if you will, within the customer base? Like how expansive could these products be within existing customers? How much further can you go in terms of growing existing customers with the expanded product portfolio?

Yes. I mean most of our net new ACV or slightly more of it generally comes from expansions to existing customers, even within our core products, and so that's definitely also the case in these emerging products. We're really just scratching the surface. Again, these are products in totality that have been rolled out going back to the beginning of last year, but they're really allowing us to land larger in some of these customers.

We called out that 9 of the top 10 net new ACV deals included 3 or more products. So that includes things outside of our core products. And that just wasn't the case before the beginning of last year, and so we're really seeing good momentum from the emerging products. And Sanjit said, it's not any one given product. We're really seeing good uptake across the board.

Got it. I mean is there any kind of rule of thumb that you could kind of point us to if your average like $100,000-plus customers paying you $350,000 per year, today, if they fully buy in across the solution portfolio? Can that go to $700,000? Like is it like a 2x, 3x uplift potential from the expanded solution portfolio?

I don't think there's like a really good rule of thumb for that. Some customers may have more assets out in the field or more frontline workers than they do commercial vehicles. Some of these deals are more of the net new ACV is coming from the emerging products than the kind of the core products. And so there's not really one rule of thumb, but it's just giving us more opportunities to land broader, again, really thinking about Samsara as a system of record and providing more kind of full-scale ROI for the customers.

Got it. And then maybe just as a follow-up. Taking the combination of the first 2 questions that my colleagues asked. The last 2 quarters have been pretty remarkable in terms of the acceleration and the net new ARR growth. It sounds like it's a combination of like more products hitting into the existing accounts and large customer go-to-market motion hitting. Is that it? Like is it just like your initiatives are sort of compounding against each other to drive that? Or is there something else under the hood that's enabling you guys to see this type of acceleration in the net new?

Yes. I mean, yes, and if you go back to Q2 where we had accelerating net new ARR growth versus Q1, obviously, again, we had the benefit of the Q1 deals that slipped in and we talked about First Student with Alex' question, Q3 was just really strong across the board. Again, quarterly record number of large customers added, tying a quarterly record in terms of largest deals, strength across emerging products, strength in international. It was just -- it was really strong across the board kind of firing on all cylinders versus kind of one thing that drove the second consecutive quarter of accelerating growth.

The next question comes from Matt Bullock with BofA, followed by Matt Hedberg with RBC.

Excellent. I wanted to ask a quick follow-up to Alex' question to clarify some of the math I've done over here because I have to admit, looking at the initial stock reaction relative to that reported net new ARR number, I'm a little bit confused here. So even in our more aggressive upside model, $105 million in net new ARR was well above our estimate when you adjust for that approximately $5 million in incremental net new ARR tailwinds that you had in 2Q from the Liberation Day slippage. Am I correct in saying this will be the first sequential growth quarter in 3 years at about 5% plus or so when you do some of that math? Or do I have my numbers correct there?

Yes. I don't think we've like commented exactly on what the Q1 Liberation Day kind of impact was. We did say mid-single digits, and that is an amount that slipped out of Q1 and we landed in Q2. And so that definitely had an impact. I think if you look back over the last couple of years, even beyond that, Q3 has been a little bit below Q2. And so I think sequentially, that's one way to look at it. The other way is obviously just the overall net new ARR growth rate. It's not only is it the second consecutive quarter of accelerating. It's the highest net new ARR growth rate in the last 7 quarters. So again, not one thing to call out that really drove that strength. It was really across the board.

Awesome. And then a quick follow-up if I could. On the First Student deal, obviously, a huge amount of vehicles, 46,000. You're attaching video, telematics, commercial NAV, impressive deal. But over the long term, it looks to me, even when you underwrite conservative pricing assumptions, this could be $30 million, $40 million-plus ACV customer. Maybe just help us think about how deals of this magnitude typically roll out, right? Obviously, they're staged rollouts. But what percentage of those 46,000 you think can be deployed in the first 6 months to a year?

It really depends. It's customer by customer. I mean some customers can deploy a lot faster. There's a lot of change management, project management required internally at the customers to deploy these systems, and so it really is customer by customer in terms of how long they will get rolled up. But many customers of this size or our largest deals get phased out over several quarters.

The next question comes from Matt Hedberg with RBC, followed by Jim Fish with Piper Sandler.

Great. I'll offer my congrats as well. I mean seeing this kind of growth at scale and GAAP profitability is elite to say the least. Sanjit, I wanted to ask about international, something that we've been -- and you have been focused on over the last several years, and it's great to see the progress there. I think you said Europe accelerated now for the second straight quarter. It's still early clearly from an international perspective, less penetrated in the U.S. If you were to sort of like look at a scorecard and say we think we're in the X inning of this journey, where are we? And as we think forward in the future, I mean, this feels like it could be a significant driver of total ACV growth. Just thoughts on kind of where we're at in this international journey.

Yes. Matt, I would agree with you that we're early. For us, international has always been an exciting long-term opportunity. We talked about this on the prepared remarks. There are more assets. Basically, there's more physical operations out in Europe, Mexico and Canada than there are in the U.S., so more vehicle count and so on. That being said, they're earlier in their digitization journey, so they're maybe kind of earlier on how they're piloting these technologies, how they're implementing them. So we're kind of in the early innings is the way I would put it, and we're investing for the long term. We want to make sure we have a great product market fit. We're spending time out in the field with those customers. I referenced our local customer conferences. They've been awesome. So we're going to continue to invest there, but it really is against that long-term opportunity to digitize operations at a more global scale.

Got it. And then on AI, you continue to roll out new products at your user conference. I'm just curious, like philosophically speaking, how do you think AI itself contributes to growth? Like is it additive to growth? And I guess, in the future, do you see pricing and packaging evolving when you continue to layer on more AI and GenAI features?

Well, I think of AI as just being an incredible unlock for this customer value. So we have this data asset that we've been compounding that gives us a lot of visibility into the physical operations, but it's way more data than any team of people can look at. And so I talked about automations, for example, being able to scale the impact of this product using AI, that's powered by LLMs, GenAI and a bunch of the newer technologies you've been hearing about.

So again, I think of it as an unlock of what's going to make it possible for these industries to digitize in a practical way without having to add a ton of head count, get value from that data. So that both improves our ability to deliver the existing products that enhances them, and it creates a possibility for some of the newer products that we launched beyond. So it really is sort of being applied across the board on both existing and new products.

The next question comes from Jim Fish with Piper Sandler, followed by Kirk Materne with Evercore.

Nice quarter. Maybe just going back to the school bus example. I mean, it's the second big school bus provider win. I guess, is there a way to think about how big of a vertical this is today? I assume very small, but really the crux of my question is how big of an opportunity in the U.S. alone it is as we think about your TAM.

I don't have an exact number for you in terms of how big the school bus vertical is off the top of my head. One of the exciting things we've seen is once these industry verticals start to open up, they really go. So we've seen this with construction as we've gotten adoption. We've seen it in segments like building materials. And now with student transportation, I think landing the largest -- landing another top 5, we're really starting to see the entire industry say, "Hey, this is a technology we need to implement because it massively improves safety. It helps us be competitive". So we look forward to seeing more growth in the student transport industry, but unfortunately, I don't have a specific number off the top of my head for you.

All good. And just on the newer products, I mean, Asset Tags ended -- ending ARR growing over 400%. I assume that's a reacceleration, albeit off of a smaller base. Is there a way to think about how that sizing now compares to that $10 million ARR given at Beyond? And more on the emerging products, how commercial navigation is going at this point?

We'll give Asset Tag kind of ARR as we cross like important milestones, but you're right. I mean it was very strong growth. And I think one thing that's really helping to open that up is that we're really expanding what Asset Tags can do. We rolled out the kind of first version of it last year. And then this year, we rolled out the tank level monitoring aspects in addition to kind of the Bluetooth location. And so we'll continue to add more and more products on to the Samsara network, and that's just another kind of extension, which has allowed us to -- again, to win our largest deal, Asset Tags deal ever in Q3.

Great. The next question comes from Kirk Materne with Evercore, followed by Dylan Becker with William Blair.

Sanjit, I want to follow up a little bit on Matt's question earlier about AI. And I was kind of curious, when your customers are thinking about their budgets next year, are they thinking about apportioning part of that towards AI? And do you guys get the benefit from that as a platform that obviously sort of future proofs them when it comes to that technology longer term? I'm just kind of curious if the discussions with bigger customers are actually benefiting from the fact that you're a platform that sort of will embed AI for them over time.

Yes. I think, first of all, the budget we sell into is the operations budget. That tends to be the largest operational budget in these companies, and they are really thinking about how do they get value. Where is the ROI going to come from? AI is, I think, intuitive to a lot of buyers now. This is going to be an unlock, but ultimately, they want to see savings when it comes to safety and efficiency and kind of the core tenets of their operation.

So I do think it's a nice tailwind for us in some of these deals. It helps us articulate why it is possible now to see this kind of value unlock. But I wouldn't say that they're pulling from a discrete AI budget within their own budgets.

Okay. That's helpful. And then, Don, just a follow-up for you. Obviously, international, another nice quarter. What's sort of the thought process on expanding go-to-market reach in those territories as you go into next year? And kind of how should we think about that from an investment perspective for you all?

I think it will be very similar to what we've done over the last couple of years. We tend to invest a little bit more internationally. Again, as Sanjit alluded to in his prepared remarks, there are more physical operations assets and frontline workers in Europe and Canada and Mexico, and those markets are even less penetrated than what we see in the U.S.

So we still see a lot of white space opportunity in our core market in the U.S., but these international markets are going to be -- continue to be more important as we think medium and long term and the durability of the growth. And so we will be making more investments in terms of our R&D go-to-market resources in international going into FY '27.

The next question comes from Dylan Becker of William Blair, followed by Alex Sklar with Raymond James.

Appreciate it. Maybe, Sanjit, just starting with you on the public sector strength. I think it's 100% growth in kind of new ACV or net new ARR there. I know we've got a dedicated team in place, and we've kind of worked through the FedRAMP process. But maybe if you could kind of double click on what that continues to unlock, how we should think about kind of what the public sector opportunity looks like and how we would expect sustained momentum from this segment in particular.

Sure. So one thing that's worth noting is in the public sector for physical operations, most of the work is actually done on the state and local level. So that's where the physical operations are taking place, whether it's maintaining roadways or sort of all the other work that happens. So we're excited to have wins like the City of Los Angeles and Chicago. I think state of New York was another big one.

And what's exciting about that is that these state and local customers, they're not competitive with one another. In other words, they share notes. They're happy to share win stories of how they're getting value, and so that's been a big part of the unlock, is kind of growing momentum that this is now possible. You can fundamentally improve safety. You can improve efficiency of asset use. And so it's not about a Fed opportunity as much as it is SLED in our business at least.

Perfect. Okay. No, that's very helpful. And then maybe for Dom on the enterprise traction piece. Obviously, another very strong quarter with $1 million and $100,000 customers, continues to accelerate and become an increasingly larger share of the overall mix. I guess, how should we think about kind of sustainability? Obviously, the opportunity is significantly large here but within that enterprise cohort and maybe how that helps drive conviction in your guys' outlook or confidence in the durability of the growth framework.

Yes. Yes, this is enterprise or strategic areas that we've been investing in for several years, again, from an R&D perspective to make sure that our platform is scalable and secure and that we have more than 350 technology integrations and then on the go-to-market side, making sure that we have the right kind of strategic AE resources but also the kind of the front-end sales engineers and customer successes required to really service these really large enterprises. So a lot of investment, a lot of -- is driving a lot of the momentum. And we feel really good about the size of the opportunity and this continuing to be a big driver of growth for us over time.

I will say that, obviously, as I kind of mentioned in my prepared remarks, these larger deals, they're a little bit longer. They're a little bit less predictable on a kind of quarter-to-quarter basis. And so the kind of the timing of when they close could be a little bit different than more of our mid-market customers that just have a lot more predictability in terms of what the sales cycle links. So I think if you're looking at the growth rate over an extended period of time, maybe multiple quarters over a year, we feel really good about the durability. There may be some more variability on a quarter-to-quarter basis.

The next question comes from Alex Sklar with Raymond James, followed by Derrick Wood with TD Cowen. Alex? Okay. Let's ask...

Sorry. Sanjit, just first one for you, following up on Dylan's question. Just given some of the success verticalizing that public sector sales force, has that changed your thought process at all on go to market for some of your other end markets?

Well, in general, we are always relooking at what's the best way to sell to these different kinds of customer segments. Nothing specific to announce at this point, but we've been happy with the public sector team. It is quite a different buyer persona and industry vertical than some of the others we sell into. But every year, as we go through the planning process, we have a number of different debates and discussions about how to organize.

Okay. Great. And Dominic, just a follow-up for you. Just given the traction on newer products we've talked about, any change to how you're thinking about the expansion motion as part of that 115% NRR framework? Is that something we could see step up as you continue to add products to the overall platform?

Our business has been very consistent over the last several years and very balanced in terms of roughly half of the business -- roughly half of the new bookings in a given period coming from new logos and the other roughly 50% coming from expansions. I think there's clearly a lot of expansion opportunity in front of us with some of these larger customers and phased rollouts and all of the newer products that we're releasing, but there's still a lot of opportunity on the new logo side as well. And so I think I would expect it to be pretty balanced going forward, but again, on the expansion side, still a lot of opportunity to grow within the existing customers we've landed.

The next question comes from Derrick Wood with TD Cowen, followed by Mark Schappel with Loop Capital.

Congrats on my end. Sanjit, the -- I just wanted to ask about the new tariffs that went into effect in November on foreign trucks and truck parts. Just are you seeing this shape customer demand one way or the other? Like does this drive more companies to turn to Samsara to extend lifespan of assets owned? Or just curious how this may have had any impact on end market behavior.

Yes. So Derrick, I was out on the road a lot last quarter, and I asked many of our customers what they thought about the tariffs, how it impact their operations. And really, they didn't think it was going to have much of a change in how they were behaving. You mentioned extending asset life spans. That is something we've seen interest in really for the last several years, which is these trucks have been getting more and more expensive over time. But they're also possible to run for a few more years if you maintain them well.

So we launched Connected Maintenance, for example. We have a lot of fault code insights and other AI that we're applying to helping extend asset lifespan. So that is, I think, more of an evergreen thing that we're seeing in the customer base, where they're always trying to figure out can we run these assets a little bit longer by maintaining them in a smarter way but not linked to the recent tariff needs at all.

Got it. Dom, in your prepared remarks, you called out selling into areas like construction, field services, energy, utilities. These are all impacted by physical AI infrastructure build-out. So could you double click on what you're seeing in that arena, how all the investments in CapEx on AI data centers may be impacting demand from those verticals and how you see that playing out over the next couple of years?

Yes, definitely. I mean we called out that construction was our largest industry in terms of net new ACV mix for the ninth consecutive quarter and it's obviously a direct beneficiary of the AI build-out. I think even more broadly, though, just the digital transformation for these physical operations businesses in all these industries really transcends what's going on in kind of in the broader economy. And so I think both of those are contributing to continued success in the industries you mentioned.

Our last question today comes from Mark Schappel with Loop Capital.

Sanjit, could you share more detail on what you're currently seeing in the telematics market, including any evidence of an accelerating replacement cycle? And then also, too, along those lines, is it fair to assume that you're still seeing high win rates versus some of the legacy providers there?

Yes, absolutely. So I would say telematics, it's part of the market that's been around for some time, really since probably the late '90s, early 2000s. So we are seeing sort of aging incumbents that haven't been able to keep up. Customers are kind of looking for other solutions, and we're very well positioned for that. So that's really this kind of modernization going on.

And then more broadly, safety is driving a lot of these new expansions and then new wins. So that's an area where we've seen a lot of strength. And the legacy telematics vendors that have been truly point solutions, they've either partnered for that or have implemented kind of basic safety products. So what we're seeing in the market is people are looking for a broader platform, something that's modern, something where they can really put multiple applications up and get a system of record going. That's different than the kind of telematics point solutions that were common about 20 years ago.

This concludes the question-and-answer portion. Thank you all for attending our Q3 fiscal year 2026 earnings call. Before I let you go, I have a few short announcements. We will be attending the Raymond James TMT and Consumer Conference in New York on December 9 and the FBN Virtual Technology Conference on December 12. We'll also be hosting the Piper Sandler Bus Tour on December 9, the Rothschild Bus Tour on December 9, the Evercore Bus Tour on January 5, the Bank of America Bus Tour on January 5 and the Jefferies Bus Tour on January 6. 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 e-mail us at [email protected]. Bye, everyone.