Samsara (IOT) Crosses $2B, But Growth Comes With A Hardware Tax

On September 3, Samsara (NASDAQ: IOT ) told investors it had crossed $2.1 billion in annual recurring revenue, growing 30% year over year, while quarterly revenue reached $508.4 million at the same growth rate. The company also logged its fourth straight quarter of GAAP profitability, with GAAP net income of $0.03 per share. For a company built on strapping sensors to trucks, forklifts, and job sites, that combination of scale and discipline is the story Samsara wants told.

The clearest signal in the September 3 report is where the growth is coming from. Samsara added 242 customers paying $100,000 or more in ARR, a quarterly record, pushing that cohort to 3,605 customers and $1.3 billion in ARR, up 38% year over year and accelerating for the fourth consecutive quarter. It also added 20 customers spending $1 million or more, another record, taking that group past $500 million in ARR with growth topping 50% for a third straight quarter.

Net new ARR came in at $134.1 million, up 28% year over year, and the company signed nine deals worth $1 million or more in net new ACV, its third-highest quarter ever. Once customers are in, they tend to buy more: 96% of the $100,000-plus cohort now uses two or more products, and products introduced in the last few years made up over 20% of net new ACV for a third straight quarter. Field services delivered its best net new ACV mix in more than two years, and public sector contributed its second-best ever, including a multi-department rollout with a major US city that now covers 7,600 lane miles of pothole detection. International business tied a quarterly record at 18% of net new ACV. Management also pointed to headroom left in the core business, noting roughly 85% of commercial vehicles still lack an AI dash camera.

Growth at Samsara runs through physical devices, and that has a cost. The company disclosed it is building up inventory, which rose from $48.2 million to $57 million, to keep pace with demand for the sensors and cameras its platform depends on. CFO Dominic Phillips said free cash flow margin is now expected to land about 100 basis points below fiscal 2026 levels, citing more IoT devices needed to support the growth outlook, the inventory buildup itself, and elevated supply chain costs in the back half of the year.

That is a reminder that Samsara's business, unlike a pure software vendor's, carries real exposure to component costs and shipping conditions it does not control. Guidance also points to deceleration from here. Third-quarter revenue is guided to $514 million to $516 million, 24% growth, down from the 30% pace just reported, and full-year fiscal 2027 revenue guidance of $2.043 billion to $2.047 billion implies 26% growth for the year. Non-GAAP operating margin guidance holds flat at 21% for both the third quarter and the full year, meaning the profitability gains investors have been rewarded for are not guided to expand further in the near term even as the hardware costs Phillips flagged persist.