IOT Q2 Deep Dive: Large Customer Expansion and AI-Powered Product Adoption Drive Momentum
IoT solutions provider Samsara (NYSE:IOT) announced better-than-expected revenue in Q2 CY2026, with sales up 29.9% year on year to $508.4 million. Guidance for next quarter’s revenue was better than expected at $515 million at the midpoint, 1% above analysts’ estimates. Its non-GAAP profit of $0.20 per share was 27.4% above analysts’ consensus estimates.
Is now the time to buy IOT? Find out in our full research report (it’s free for active Edge members).
Samsara (IOT) Q2 CY2026 Highlights:
- Revenue: $508.4 million vs analyst estimates of $483.4 million (29.9% year-on-year growth, 5.2% beat)
- Adjusted EPS: $0.20 vs analyst estimates of $0.16 (27.4% beat)
- Adjusted Operating Income: $106 million vs analyst estimates of $87.09 million (20.8% margin, 21.7% beat)
- The company lifted its revenue guidance for the full year to $2.05 billion at the midpoint from $2.01 billion, a 1.8% increase
- Management raised its full-year Adjusted EPS guidance to $0.77 at the midpoint, a 8.5% increase
- Operating Margin: 1%, up from -6.8% in the same quarter last year
- Annual Recurring Revenue: $2.12 billion (29.5% year-on-year growth, beat)
- Billings: $533.4 million at quarter end, up 25.3% year on year
- Market Capitalization: $22.58 billion
StockStory’s Take
Samsara’s second quarter results were met with a positive market response, reflecting management’s emphasis on large customer expansion and broad-based adoption of new AI-powered solutions. CEO Sanjit Biswas highlighted that growth was propelled by record additions of customers spending over $100,000 and $1 million annually, as well as increasing multi-product usage across sectors such as field services and the public sector. Management identified the company’s expanding data asset and real-time operational intelligence as critical enablers of customer ROI and competitive differentiation.
Looking forward, management attributed its improved guidance to sustained demand for digitization and automation in physical operations. CFO Dominic Phillips noted that strong momentum in emerging products and accelerated international uptake should support continued growth, but also flagged higher upfront hardware costs as Samsara proactively invests in inventory to meet customer needs. As Biswas stated, “Each new product can deepen our customers’ ROI and widen the path to their next expansion,” underscoring Samsara’s strategy to drive customer value and retention through platform breadth.
Key Insights from Management’s Remarks
Management connected outperformance to strong large-customer expansions, rapid adoption of emerging AI and automation products, and rising international traction.
- Large enterprise expansion: Samsara’s largest customers, particularly those spending over $100,000 and $1 million in annual recurring revenue, drove growth through significant expansions, with public sector and construction verticals highlighted as key contributors.
- Emerging product momentum: New AI-powered products—such as AI Multicam, Ground Intelligence, and the single-use Tracking Label—were adopted across diverse industries, with management noting that over 20% of net new bookings arose from these offerings for the third consecutive quarter.
- Multiproduct adoption: Almost all large customers now use two or more products, with a growing portion subscribing to three or more. This multiproduct expansion is tied to a higher net retention rate and deeper customer integration.
- International growth acceleration: Europe and Mexico delivered record or near-record net new annual contract value, attributed to tailored solutions that address regional compliance and security needs, and partnerships with large fleet operators.
- Data asset and AI differentiation: The company’s proprietary operational data—spanning over 30 trillion annual data points—is used to enhance AI models and automation capabilities, enabling unique offerings in safety, maintenance, and logistics that are difficult for competitors to replicate.
Drivers of Future Performance
Management expects continued growth to be driven by demand for digital transformation, multiproduct adoption, and the scaling of AI automation despite temporary supply chain cost headwinds.
- Sustained demand for digitization: Management cited increasing urgency among large enterprises and public sector clients to digitize vehicles, equipment, and workflows as a primary tailwind. This is expected to drive customer expansions and new logo growth, especially in sectors like construction, utilities, and transportation.
- Multiproduct and AI attach: The company’s strategic focus on adding more products per customer, especially AI-driven features like agents for safety and dispatch, is anticipated to boost annual recurring revenue and retention. Management believes this approach will deepen integration and increase customer switching costs.
- Inventory and supply chain investment: CFO Dominic Phillips flagged higher upfront hardware and inventory costs in the near term due to accelerated growth and proactive purchasing. While these costs may temporarily pressure free cash flow, management expects the long-term margin profile to normalize as supply chains stabilize and higher-margin AI software adoption grows.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will watch (1) the pace of emerging product adoption, particularly AI Multicam and agent-based automation; (2) whether multiproduct expansion and large-customer growth sustain the current momentum; and (3) signs that supply chain investments and inventory buildup translate to improved fulfillment and gross margins. Ongoing international expansion and public sector penetration remain additional areas of focus for tracking Samsara’s execution.
Samsara currently trades at $44.33, up from $39 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
Our Favorite Stocks Right Now
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.