Samsara (IOT) Q2 2026 earnings review
Large Customers Power Record Quarter, But Guidance Signals Deceleration
Samsara delivered a strong beat-and-raise quarter, demonstrating excellent execution and momentum with large enterprise customers. Q2 Annual Recurring Revenue (ARR) grew 30% YoY to $1.64 billion, driven by a record addition of 17 customers paying over $1 million annually. Profitability was a major highlight, with Non-GAAP operating margin reaching 15%, a 9-point improvement year-over-year. The company successfully closed all deals that had slipped from Q1 due to tariff uncertainty. However, the forward guidance, while raised, implies a notable deceleration in revenue growth to the low-to-mid 20% range for the second half of the year, suggesting a transition from hyper-growth to a more moderate, albeit highly profitable, growth phase.
🐂 Bull Case
The company's focus on large, complex operations is yielding significant results. Customers with over $100k in ARR now contribute nearly $1 billion in recurring revenue (+35% YoY), and the company added a record 17 new million-dollar-plus customers.
Samsara achieved a Rule of 45 quarter (30% revenue growth + 15% non-GAAP op margin), demonstrating a rare combination of high growth and strong profitability at scale. The full-year margin guidance was raised to 15%, signaling sustained efficiency.
New products launched in the past year now contribute 8% of net new customer value, with notable successes like Asset Tags landing its largest-ever deal. This proves the R&D flywheel can create new, meaningful revenue streams.
🐻 Bear Case
The forward guidance points to a clear deceleration. Implied revenue growth slows from 30% in Q2 to 24% in Q3 and 21% in Q4. While still strong, this marks a significant step-down from historical growth rates.
Management noted that the increasing mix of large enterprise deals introduces longer, less predictable sales cycles, which could lead to more volatility in quarterly results, as seen with the deal slippage in Q1.
⚖️ Verdict: 🟢
Bullish. The execution is top-tier, especially in the enterprise segment, and the profitability profile is exceptional. While the growth deceleration baked into guidance is a key point to monitor, the momentum with large customers, successful new product rollouts, and strong operating leverage provide a compelling case that Samsara can sustain durable, profitable growth for the long term.
Key Themes
Enterprise Engine Firing on All Cylinders
Samsara's strategy to capture the largest, most complex physical operations is its primary growth driver. The company ended Q2 with a record 17 new customers with over $1 million in ARR, bringing the total to 147. This cohort now generates over 20% of total ARR. The >$100k ARR customer base grew to 2,771, contributing approximately $1 billion of ARR, up 35% YoY. This upmarket focus provides higher retention and significant expansion opportunities.
Guidance Implies Material Growth Deceleration
Despite the strong Q2 beat, the forward guidance contradicts the narrative of sustained high growth. The company guided Q3 revenue growth to +24% YoY and implied Q4 growth of +21% YoY. This is a material step-down from the 30% reported in Q2 and the 30%+ rates seen over the past year. ARR growth has also been steadily decelerating, from 35% in Q3'25 to 30% in the current quarter, confirming the trend.
Profitability and Efficiency Reach New Highs
Samsara continues to demonstrate impressive operating leverage. Non-GAAP operating margin expanded to 15% in Q2, a significant increase from 6% in the prior-year quarter. This was the fourth consecutive quarter above the 'Rule of 40' threshold. The company raised its full-year non-GAAP operating margin guidance to 15%, up from 9% in FY25, showcasing a commitment to balancing strong growth with financial discipline.
New Products Gaining Commercial Traction
The platform's innovation engine is translating into revenue. Products launched in the past year contributed 8% of net new ACV. Asset Tags had a breakout quarter, landing its largest-ever deal with Bonnie Plants for 15,000 tags. Other new products like Connected Workflows, Connected Training, and Commercial Navigation are also contributing, validating the strategy of using the core platform to launch and cross-sell new applications.
AI and Data Evolving into Key Differentiator
Management is increasingly positioning Samsara as an AI company powered by a unique data asset, now processing 20 trillion data points annually. This scale enables new AI-powered features like real-time weather intelligence and enhances core safety and efficiency products. Management also highlighted the global AI infrastructure build-out as a tailwind, as Samsara's customers in construction and utilities are key players in these projects.
Resolved Q1 Deal Slippage Highlights Macro Sensitivity
While all larger deals that slipped from Q1 due to tariff uncertainty closed in Q2, the initial incident highlights the business's sensitivity to macroeconomic shocks. Customers paused software spending to prioritize physical asset procurement. Though the issue appears resolved, it confirms that in times of uncertainty, some customers may view Samsara as a deferrable expense, creating potential for future volatility.
Other KPIs
Stable. Grew 30% YoY, a slight deceleration from 31% in Q1 and 32% in Q4. While the absolute dollar additions remain strong, with $105 million of net new ARR in the quarter, the slowing percentage growth aligns with the forward-looking guidance.
Reversing. FCF margin was 11%, a strong result and a 7-point improvement YoY. This continues to demonstrate the cash-generative nature of the subscription model at scale, providing flexibility for continued investment in growth.
Stable. International markets, particularly Europe, remain a consistent growth driver. Europe's net new ACV growth accelerated sequentially to its highest level in four quarters, showing that sustained investment in the region is paying off and providing geographic diversification.
Guidance
Decelerating. The midpoint implies 26% YoY growth. This is a raise from the prior guidance of 24-25% growth, but represents a slowdown from the 33% adjusted growth achieved in FY25.
Decelerating. The midpoint of $399M represents 24% YoY growth, a marked slowdown from Q2's 30% YoY growth. The sequential growth from Q2 is only 2%, indicating conservatism or a tangible slowdown in the business.
Accelerating. This is a significant increase from the 13% guided last quarter and the 9% achieved in FY25. Management is clearly prioritizing and delivering on efficient operations alongside growth.