Samsara (NYSE: IOT) delivered a Q2 that beat on both revenue and earnings, crossing $2.1 billion in annual recurring revenue for the first time. Revenue rose 30% year-over-year to $508.4 million, $25 million above the analyst estimate of $483.3 million. Non-GAAP diluted EPS of $0.20 beat by $0.04. GAAP EPS of $0.03 marked the fourth consecutive quarter of profitability for the Connected Operations platform company.
The headline numbers are one thing. The composition of the beat is another.
Samsara added $134.1 million in net new ARR during the quarter, up 28% from a year ago. That growth rate is consistent with recent quarters. The mix is shifting decisively toward the largest customers. Customers with ARR over $1 million now represent more than $500 million of total ARR, growing over 50% year-over-year for the third straight quarter. This cohort is becoming the engine of the business. The acceleration is structural: these are complex, multi-site operations that deepen their relationship with Samsara over time rather than churning.
Non-GAAP operating margin expanded 6 percentage points year-over-year to 21%. GAAP operating income turned positive at $4.9 million versus a $26.6 million loss a year ago. The margin expansion came from operating leverage, not one-off cost cuts. Revenue grew 30%, while total operating expenses grew only 18%. The largest line item, sales and marketing, rose 25% to $217.8 million, but as a percentage of revenue it dropped to 43% from 44% a year ago. This points to improving sales efficiency, not a pullback in investment.
Free cash flow reached $64.7 million, a 13% margin, up from 11% a year ago. The company now holds $1.33 billion in cash, cash equivalents, and investments. That gives it ample runway to invest in product and go-to-market without needing to raise capital.
Guidance for Q3 calls for revenue of $514 million to $516 million, representing 24% growth, and non-GAAP EPS of $0.18 to $0.19. For the full fiscal year, Samsara expects revenue of $2.043 billion to $2.047 billion, implying 26% growth, with non-GAAP operating margin of 21% and non-GAAP EPS of $0.76 to $0.78. The Q3 revenue guidance is slightly below what a straight-line extrapolation of Q2's beat would imply. Management is building in some conservatism. The full-year guidance implies a Q4 that is roughly in line with Q3, reasonable given the lumpy nature of large enterprise deals.
The real signal from this quarter is the durability of large customer adoption. Samsara's customer base is becoming more concentrated in high-value accounts, and those accounts are expanding faster than the rest of the portfolio. That dynamic supports the company's ability to sustain 25%+ growth even as the base gets larger. The risk is an over-dependence on a small number of very large customers, but the data so far shows the cohort is broadening, not narrowing. For now, the trajectory is intact. The guidance, while cautious, does not suggest any deceleration beyond what the law of large numbers would dictate.