Samsara (NYSE: IOT) opened fiscal 2027 with a clean, wide beat. Revenue hit $478.8 million, topping the $455.2 million consensus by 5%. Non-GAAP EPS of $0.17 beat the $0.13 estimate by over 30%. These headline numbers are strong, pointing to durable demand rather than a one-off tailwind.
Net new annual recurring revenue reached $100.7 million, a 30% year-over-year jump that pushed ending ARR to $1.991 billion. That puts the company a hair's breadth from the $2 billion milestone, with the 30% growth rate holding steady from the prior year. Constant-currency ARR growth was also 30%, so FX was not a factor.
Margins are a different story. GAAP gross margin slipped 200 basis points to 75%, and non-GAAP gross margin fell 300 basis points to 76%. The release does not break down the driver, but dollar gross profit grew $77.4 million on a revenue increase of $111.9 million. This means cost of revenue grew faster than revenue. Still, operating leverage improved sharply. GAAP operating income swung from a $33.3 million loss to a $7.2 million profit, and non-GAAP operating margin expanded 500 basis points to 19%. The leverage is real, coming from revenue growth outpacing operating expense growth, not from cost cuts.
This marks the third consecutive quarter of GAAP net income per share of $0.08. The company expects to be GAAP EPS profitable for the full fiscal year, even excluding a $30 million arbitration award from Motive. That award, booked in the quarter, added $0.05 to GAAP EPS. Strip it out, and GAAP EPS would have been about $0.03, still positive. Samsara is past the inflection point where GAAP profitability depends on one-off items.
Adjusted free cash flow rose to $73.2 million, a 15% margin versus 12% a year ago. Cash from operations was $81.4 million, up 55% year over year. The balance sheet remains clean: $1.28 billion in cash and short- and long-term investments against no debt. The company is not capital-constrained, generating cash at a rate that supports organic investment without dilution.
Guidance was reiterated, not raised. Q2 revenue is expected at $482 million to $484 million, representing 23% to 24% year-over-year growth. Full-year revenue is pegged at $2.005 billion to $2.013 billion, also 24% growth. The full-year non-GAAP operating margin guidance of 20% implies further expansion from the Q1 level of 19%. Management is signaling confidence in the trajectory but chose not to pull guidance higher despite a beat. That is conservative, not cautious. The company has a history of guiding conservatively and beating, and this quarter fits that pattern.
The forward read is straightforward: Samsara is executing well in a large addressable market. The 30% ARR growth at nearly $2 billion in ARR is rare in enterprise software at this scale. The question is whether the gross margin compression is structural or temporary. If cost of revenue pressures persist, the operating margin expansion may slow. For now, the beat is clean, the cash flow is strong, and the guidance leaves room for upside.