Q1 2026 Samsara Inc Earnings Call
Our customers have large complex operations, they rely on commercial vehicles to move goods and services to power infrastructure.
According to the National Highway traffic safety administration, there are more than 500000 accidents involving large trucks in the U S every year.
<unk> accidents, not only cause injuries, but are a source of reputational risks and potentially millions of dollars in insurance payouts in premiums.
To better understand our customers' safety challenges, we surveyed more than 1500 commercial drivers.
They represent 21 industries spanning seven countries.
We found that 79% have had a near miss while driving distracted and 67% of experienced drowsiness, while driving.
When asked about how to reduce this risk 95% of survey drivers agreed that coaching positively impacts our habits on the road.
This shows the importance of technology to identify risks and help drivers avoid distractions on the road doing this at scale is a tremendous challenge our customers recognize that this is largely a data problem and they're using AI and automation to improve their safety.
We built <unk> AI powered safety solutions to directly manage risk at enterprise scale.
Our platform provides comprehensive AI alerts covering a wide range of safety concerns. This includes collision risk traffic violations policy violations are striving driver fatigue, speeding and distracted driving events like mobile phone use smoking and eating and drinking.
Our new intelligence safety, Inbox, and AI powered insights give our customers a smarter way to identify risks and coach drivers based on patterns not just since.
With high turnover rates and driver shortages recognition is critical for our customers to keep their best drivers, we're doubling down on safety and recently launched new positive recognition tools within the <unk> platform.
This includes streets and milestones personalized kudos and shared visibility.
These features use gamification to help our customers drive improvements in employee engagement and overall safety outcomes.
We're excited to help our customers reduce risk protect their workers and save millions of dollars.
I'd like to share an example of a customer using AI to improve their safety in Q1, we partnered with one of the largest retail propane companies in the U S. They have over 3000 vehicles in 'twenty 300 employees that deliver propane to residential industrial commercial and agricultural customers.
They also provide affordable propane tank exchange operations.
The first landed with telematics in Q3 of fiscal year 'twenty four in Q1, we had one of our largest expansions with them signing a deal for Samsung's video based safety.
In a pilot they saw a 75% reduction in safety events and a 71% reduction in mobile usage from pilot to partnership. They said the key differentiator for <unk> was the impact of <unk> on the safety of their operations.
A large portion of our customers' operating budgets goes towards physical assets like vehicles, forklifts cranes and other equipment.
These assets have one hundreds of moving parts there put to heavy use under demanding conditions and inevitably break down over time.
As a result, most organizations allocate about 10% of their operational budget for repairs and maintenance.
In today's environment, our customers are focused on maximizing the value of their assets and optimizing maintenance spend.
In particular, they are interested in extending the useful life span of these critical resources.
Recently, they've been sharing feedback on the complexities of maintenance at scale the impact of tariffs and the challenges with the resilience of their supply chain.
To address this theyre seeking AI to drive proactive maintenance to improve the operations with healthier assets.
We're keeping our customers, we're helping our customers achieve their maintenance goals with our AI powered maintenance solutions.
At the core of our solution is our massive data asset that powers our AI.
We have millions of assets on our platform they collectively travel more than 80 billion miles each year.
This provides us real world data on how assets run and how they break we.
We digitize all of this information through real time diagnostics, and nearly 230 million vehicle inspections, we see annually.
This real world data powers, our AI to provide unique insights on the severity of fault codes and common vehicle repairs.
We can then help our customers transform these insights into action by starting a maintenance workflow using our work order accretion forms with pre populated data.
We're just getting started on the maintenance journey with our customers and are excited for the opportunities ahead.
[music] I've been deputy Chief of operations since 2019, So my primary responsibilities as the oversight of all of our field operations that we have basically we're just looking out to the wellbeing of our community using technology wherever we can to enhance the efficiency of our operations.
I'd like to share an example of a customer using AI to transform their maintenance Sterling Crane is one of the world's largest mobile crane rental companies.
They rent supply and service cranes through 16 branches in Canada and have equipment across hundreds of job sites.
They face unique operational challenges like maintaining cranes in remote locations and keeping the cranes road safety in Canada is difficult winters in wide ranging train.
Some saw a really elevated us to the 21st century to use this technology. So we're always making the best command level decisions. What we do is extremely dangerous driving through city streets with lights and siren to emergency calls for service and that puts our high stress load on the crude that's inside of those units having things in place to enhance their safety.
With <unk>, they reduced their unplanned maintenance from 34% to 20%.
This saved 10000 hours of technicians time, which equals to $500000 of annual maintenance labor saved there.
And enhance their driving skills is certainly a benefit to all.
They also report over $3 million saved in equipment maintenance and replacement costs, there were $2 million saved for on road equipment and additional $1 million saved on off road equipment.
Charles: The grade is just past, Louisiana say, Charles I, just talked to my assets there.
That's moving up the routes towards our location here. So it's probably about 10 or 15 minutes away. So allocation. So we'll soon have some actually down this way.
We are proud to partner with Sterling Crane to help them save money and time and better maintained their assets.
As we build for the long term, we are investing in our ecosystem through OEM relationships.
Okay.
Vehicle and equipment manufacturers are building modern assets that are pre connected to the cloud right off the assembly line to.
Charles: To create a seamless customer experience, we're integrating directly with the Oems so customers can deploy <unk> without installing any hardware. This.
This helps our customers who have complex operations to simplify the digitization of their assets.
This quarter, we continued to expand our ecosystem.
Okay.
First we're partnering with handout translate a leading manufacturer of semi trailers in North America to improve trailer visibility. This marks our first OEM integration that supports <unk> video based safety features.
Second we're partnering with to Lantus, one of the world's largest vehicle manufacturers.
We expect this integration will allow over 14 million vehicles to connect directly to <unk> connected operations platform.
And third we're partnering with ribbon, who is an electric vehicle leader to streamline electric fleet management, we will integrate essential <unk> data directly into the sensor platform and provide a single pane of glass.
It was a strong start to the new fiscal year, we're grateful to our customers partners investors and the <unk> team around the world for their shared commitment to increasing the safety efficiency and sustainability of the operation of the power of the global economy. We're excited for the year ahead.
Okay.
We're looking forward to seeing many of you at beyond our annual customer conference and at Investor Day in a few weeks in San Diego.
And beyond we'll be bringing together leaders to discuss the state of physical operations and new ways to deliver value through data and AI will also be announcing new products and features we hope you can join us.
I'll now hand, it over to Dominic to go over the financial highlights for the quarter.
Dominic: Thank you Sanjay Q1, FY 'twenty six was highlighted by strong topline growth and continued efficiency gains after a strong start to the quarter, we experienced instances of elongated sales cycles on some transactions in the period. Following liberation day in April as some customers prioritize spending on tariff impacted goods, such as vehicles equipment and other.
Dominic: Assets. Despite the current macro uncertainty we are encouraged that a number of these transactions closed in may that we generated record pipeline in Q1 and that our win rates remained generally consistent and healthy all of which signal continued strong customer interest in our platform and the clear and fast ROI it delivers.
Dominic: Q1, ending <unk> was 154 billion growing 31% year over year, both as reported and in constant currency Q1 revenue was $367 million growing 31% year over year or 32% adjusted for constant currency.
Dominic: Several factors drove our top line performance in Q1 first we focus on serving large enterprise customers to drive efficient growth at scale to better reflect the structure of our largest enterprise customers, who often have multiple subsidiaries and grow through M&A. We have adjusted our definition of a customer previously separate entities within a larger.
Dominic: <unk> were counted as individual customers.
Dominic: Our updated methodology counts affiliated entities within the same parent organization as a single customer.
This better aligns with our current go to market strategy and how we assign customer accounts to our sales reps. Overall. This change has a small impact on our large customer related metrics and a more detailed comparison using the previous and updated methodologies can be found in the appendix of our investor presentation.
Dominic: We ended Q1 with 2000, and 638, 100, K plus <unk> customers growing 35% year over year, including a quarterly increase of 154 compared to 105 in Q1, one year ago.
Dominic: RR per 100, K plus customer increased to 338000, and the combination of adding more large customers and a higher average <unk> resulted in <unk> mix from 100, K plus IRR customers, a 58% up from 56% one year ago, and 52% two years ago.
Dominic: Second our customers are increasingly utilizing <unk> as a system of record for physical operations by subscribing to multiple applications on a single unified platform.
Dominic: 95% of our 100, K, plus <unk> customers and 85% of core customers subscribe to tour more Samsung products and 66% of our 100, K plus our customers and 38% of core customers subscribe to three or more products.
We also saw a number of large multi product transactions in Q1 eight of the top 10, new logos in Q1 included at least two products and five included at least three products one of our largest new customers. In Q1 was knife River, a leading U S. Construction materials and contracting company operating across 14 states with over 5700 employees.
The company has made over 100 acquisitions over the last 30 plus years, helping revenue growth to more than $2 8 billion annually.
Dominic: Their initial purchase included video based safety telematics and equipment monitoring and a pilot study they observed a significant reduction in total safety events and AI coaching had an immediate impact on both distracted driving and seatbelt usage and.
Dominic: Eight of the top 10 expansions in Q1 included at least two products and seven included at least three products.
One of our largest expansions in the quarter was with a leading provider of vegetation management line clearance and electric utility line construction.
Dominic: This customer has expanded with US 15 times since becoming a customer in 2019 in Q1. They added more video based safety telematics and equipment monitoring licenses deploying <unk> on a recently acquired company.
Dominic: As a result of our strong expansion results, we achieved our target dollar based net retention rate of approximately 115% under both the previous an updated customer count methodology.
Dominic: And third we demonstrated strong execution across several frontier markets, 18% of net new HCV came from international geographies, which was tied for the highest quarterly contribution ever the biggest area of international strength was Europe, which accelerated net new ACB growth sequentially and contributed its highest quarterly net new ACB.
Mix ever.
Dominic: We also saw momentum across construction transportation field services and public sector end markets construction.
Dominic: Construction drove the highest net new ACB mix of all industries for the seventh consecutive quarter.
Dominic: Transportation was our second largest vertical this quarter, achieving its highest year over year growth in over four years.
Dominic: Field services contributed its highest quarterly net new ACD mixing over five years.
And public sector achieved its highest year over year growth in over three years, driven by wins with the state of South Carolina City of Houston, and one of the largest counties in the United States and.
Dominic: And last we also saw strength in emerging products equipment monitoring accelerated year over year net new HIV growth for the fourth consecutive quarter driven by another strong quarter from asset tax.
In addition to driving strong top line growth, we continued to deliver operating leverage across our business as we scale non.
Dominic: non-GAAP gross margin was a quarterly record 79% in Q1, non-GAAP operating margin was 14% compared to 2% in Q1, FY 'twenty five and adjusted free cash flow margin was 12% in Q1 compared to 7% in Q1 last year Okay.
Dominic: Okay now turning to guidance, which is based on FX rates as of May 3rd.
Dominic: For Q2, we expect revenue to be between 371% and $373 million, representing 24% year over year growth, both as guided and in constant currency non-GAAP operating margin to be 9% and non-GAAP EPS to be between six and seven.
For full year FY 'twenty six we expect revenue to be between 1.547, and 1.555 billion representing year over year growth of 24% or between 24, 25% adjusted for constant currency non-GAAP operating margin to be approximately 13% and non-GAAP EPS to be between 39 and 41.
And finally, please see the additional modeling notes in our shareholder letter.
Dominic: To wrap up in Q1, we continued high growth at scale, while also continuing to deliver operating efficiency gains looking forward. We believe we're well positioned to continue delivering durable and efficient growth and we're excited to continue helping our customers operate more safely efficiently and sustainably and with that I'll hand, it over to Mike to moderate Q&A. Thanks, Dominic we will now.
Mike: <unk> line up for questions. When it's your turn please limit your questions to one main question and one follow up question.
The first question today comes from Alex Zukin, with Wolfe, followed by Keith Weiss with Morgan Stanley.
Alex Zukin: Hey, guys. Thanks for taking my question maybe.
Speaker Change: Just the first one with regards to the long the sales cycle elongation com.
Commentary, maybe just talk about you mentioned I think some of those deals closed in may just the quality the duration of those deals the size of those deals in terms of where they are the same as originally.
Speaker Change: Constructed and maybe just also talk a little bit about the pipeline construction in this period is kind of back to normal or maybe just a little bit of those impacts.
Speaker Change: Yeah, So I would say the construction of the deals didn't change we ended up.
Speaker Change: <unk>, a number of them and and May I don't think it makes sense to kind of fully quantify the.
Speaker Change: The amount from Q1 into Q2, because theres still a lot of macro uncertainty that can create more timing risk when when deals close I think I would say in Q1. It was it was.
Speaker Change: More than hundreds of thousands it wasn't tens of millions. It was it was a multi million dollar impact on the pipeline point.
Speaker Change: The pipeline was good we had a record pipeline generation quarter in Q1 that doesn't necessarily obviously benefit us in Q1. These are enterprise sales cycles. So that they they take time to kind of play out, but I think it goes more to just demonstrate the point that customer demand remains strong. This is a large market. It's growing quickly where we're providing real tangible ROI quick payback.
Speaker Change: Back periods and customers are interested in that Theres, just a lot of macro uncertainty with the tariff related news.
Speaker Change: Got it and then maybe as a follow up for you the OEM investments and relationships. We're quite notable this quarter, maybe just talk through the expanded opportunities as this opens up for you maybe how it changes or strengthens your competitive positioning.
Speaker Change: In the field and any other impacts.
Speaker Change: We should think through where to think about from those deals this year.
Speaker Change: Sure Alex I think about it through the customer lens, we're just trying to make it as easy as possible for our customers to get their operations into the sensor on connected operations cloud. This essentially makes it a cloud to cloud connection so as they get delivery of these new vehicles, they're already easily populated up in our cloud.
Speaker Change: And that's been the strategy for a couple of years, we've been doing partnerships with light and heavy duty manufacturers yellow iron so construction equipment by Caterpillar and John Deere.
Speaker Change: Refrigeration manufacturers. So the whole idea is just get as much data in the cloud as possible and we think that will help us get deeper insights into the performance of these assets and like I said, just reduce friction in terms of how these things get turned on.
Speaker Change: Perfect. Thank you guys.
Speaker Change: The next question comes from Keith Weiss with Morgan Stanley followed by Michael <unk> with Wells Fargo.
Keith Weiss: Excellent. Thank you guys for taking the question and congratulations on a strong start to the fiscal year.
Speaker Change: I was looking to drill down into a couple of the Alex is 12 questions that he has on his question.
Speaker Change: One on the sort of deal cycles elongation, you guys are selling a broader solution into the end customer or youre seeing more attach across multiple products, you're doing more with sort of.
Speaker Change: Bigger deals how do you sort of tell the difference between was like a macro related deal cycle elongation versus just like deal cycle elongation from having to sell a bigger deal and having to sell a more sort of integrated set of technologies.
Speaker Change: It's just having direct conversations with customers like liberation de hits.
Speaker Change: But higher tariffs.
Speaker Change: Come on board than I think what anyone kind of expected and then customers, saying hey.
Speaker Change: I'm buying a lot of tariff impacted vehicles and assets and other equipment and I'm you know.
Speaker Change: A focus on prioritizing.
Speaker Change: My my strategies, and how I'm going to purchase these things and that becomes kind of a near term concern because those are assets that they ultimately use to drive revenue and so hey.
Speaker Change: I still plan on digitizing my operations I understand that there's real ROI here and I am excited about the payback period.
Speaker Change: But in this period of uncertainty I need to make sure that I'm focusing on some of these tariff impacted goods in and that can just delay conversations.
Speaker Change: Got it.
Speaker Change: Or are there specific verticals that youre selling into that you saw bigger impact than others, and if so which one saw the bigger impacts.
Speaker Change: No I think it was it was.
Speaker Change: Widespread I think across all of our end markets.
Speaker Change: They're there.
Speaker Change: And people intensive businesses and so they're all they're all purchasing.
Speaker Change: Again vehicles heavy machinery equipment assets.
Speaker Change: And a lot of those goods are impacted by tariffs.
Speaker Change: Got it and then just one on the margins gross margins continue to expand really well, perhaps you could kind of unpack some of the drivers and how much more room is there for further expansion there and does the expansion of OEM relationships I E being able to take those kind of straight to the data and not have to put your data collection device in there does that help with the.
Speaker Change: Gross margin trajectory I think it can in the future. It's not today, it's just it's not a material part of the business.
Speaker Change: We're really excited about all of these partnerships, we have and we can kind of meet customers, where they are if they've got.
Speaker Change: Connected vehicles and assets, we can pull that data directly and through an OEM cloud if they don't we can provide them a gateway or device to ultimately collect the data into the cloud and so as more and more customers have those assets that can benefit them on the on the gross margin side I would just say, we're really pleased with our quarterly record 79%.
Speaker Change: I don't expect a lot of near term leverage and gross margin I think that as we're rolling out a number of.
Speaker Change: Software only skus and products, even things like asset tags. All of those are gross margin accretive and so as those products scale that can that can open up more opportunities for <unk>.
Speaker Change: Gross margin benefits in the future and then obviously as we continue to scale and get larger there's opportunities on the cost side as well to get more economies of scale.
Speaker Change: Okay. Thanks for the time guys. Thanks.
Speaker Change: The next question comes from Michael Cherny with Wells Fargo fell by Matt Hedberg with RBC.
Speaker Change: Great. Thanks, very much appreciate you taking the questions.
Speaker Change: Been hinting at the macro, but if I listen to the prepared remarks and look at the letters of construction 17th straight quarter of highest mix public sector is showing through as a stronger vertical can you just speak to what youre seeing within those <unk>.
Speaker Change: Merging verticals, that's that's resonating in the current environment and public sector, specifically scenario, we've gotten a lot of questions from investors around what youre, enabling.
Speaker Change: Allowing the.
Speaker Change: The product set to really resonate there.
Speaker Change: Sure I'll take that one so I think.
Speaker Change: Across both construction and public sector, it's really being driven by a desire to increase efficiency.
Speaker Change: Especially I have been spending a lot of time with some state and local.
Speaker Change: Customers and prospects and they are all looking to find savings in operational budgets without having to cut down staff.
Speaker Change: And that might be something as obvious as fuel savings from putting telematics devices out there and reducing engine idling.
Speaker Change: And then it can also mean, reducing insurance claims for some of these large municipalities. So that's kind of the practical side of things I think that's unchanged given the macro environment.
Speaker Change: In terms of that interest and really these are areas that are haven't digitized as heavily as you might expect so as we kind of look industry by industry construction and public sector are both areas, where they historically have not bought a lot of telematics or a safety monitoring systems that were connected and now they see the value in it and Theyre looking to digitize.
Speaker Change: Excellent and then Dominic maybe just on broader margin as you.
Speaker Change: Worked through a more fluid environment remind us how you approach the tradeoffs signals youre watching and how youre thinking about things like sales capacity.
Speaker Change: Within the current environment. Thank you.
Speaker Change: Yeah, I mean, we are looking at kind of our forecast on a on a monthly and quarterly basis and.
Speaker Change: On sales capacity, we're really looking at kind of the productivity from the sales reps and the productivity is.
Speaker Change: Is in line with where it was in previous years or if its up that gives us confidence that we can continue to add more more capacity.
Speaker Change: We saw that in Q1, so sales productivity was good we've been adding more sales capacity and we plan to continue to do so throughout the year.
Speaker Change: Thanks very much.
Speaker Change: The next question comes from Matt Hedberg with RBC, followed by Kirk <unk> with Evercore.
Speaker Change: Thanks, guys for the questions.
Speaker Change: Dom you called out asset tags as part of the success Youre seeing in equipment monitoring and Thats, great to hear and I know, it's still early but when you are seeing wins can.
Speaker Change: Can you talk about what it's doing to HCV.
Speaker Change: This point.
Speaker Change: It depends on on a given deal in some cases, it can be kind of the the leading product.
Speaker Change: For the customer use case in some cases it could be an add on and many of the examples you know customers are trying it out on kind of one subset of assets before they're rolling it out wall to wall, we haven't really seen any kind of full full deployments across new set of assets.
Speaker Change: But but kind of three consistent case study are use cases that we're seeing first lost or stolen assets. If an item is missing being able to find it very quickly.
Speaker Change: Second is really around worker efficiency, so cutting down the time that it takes for working to go out and find an asset somewhere and then the last one is really around utilization. So if these things are moving are being used we can we can pick that up and then it can help inform if customers should how they should manage their assets if they need to buy more of them or if they can redeploy them to to other areas. So.
Speaker Change: We're excited with the progress we've we've been selling it now for about a year and it's been it's been a good.
Speaker Change: Point of strength for equipment monitoring.
Speaker Change: That's great and then.
Speaker Change: You noted that net new grew 8% constant currency and <unk> and you're talking about kind of flattish or at least flattish net new for the remainder of the year I am curious post liberation day in some of these deals that slipped are you applying additional conservatism now too to that guidance philosophy from an IRR perspective, because previously we.
Speaker Change: About flat net new as well so I'm just curious on sort of what the assumptions were in that net new commentary, yeah, I mean I.
Speaker Change: I would say for net new <unk>.
Speaker Change: Some color on the modeling notes in revenue.
Speaker Change: <unk> philosophy is similar to previous quarters, we're trying to make sure that we're setting guidance with a lot of confidence that that accounts for various downside scenarios. If those downside scenarios don't ultimately play out. It has generally resulted in more outperformance and you saw that obviously in Q1.
Speaker Change: So I think that's that's kind of how we're thinking about things we feel good about being able to hit that even with downside scenarios and and if if if we don't see those come to fruition, we we'd like to be able to do better than that.
Speaker Change: Got it thanks guys.
Speaker Change: The next question comes from Kirk <unk> with Evercore, followed by Jim Fish with Piper Sandler.
Kirk <unk>: Hi, Thanks, very much guys and congrats on a nice start to the year.
Speaker Change: I was just wondering can you talk a little bit about weather.
Speaker Change: I in general is coming into the conversations with your clients I realize they're really looking to have you guys got to help them with their operations with safety, but I'm just kind of curious about the role AI is now playing in those conversations as it's become a bigger part of the broader Zeitgeister 90.
Speaker Change: Yeah, Kirk I think absolutely every everyone that I've spoken with has interest in AI and they see it as a transformational technology that being said our customers are really focused on clear and fast ROI. These are industries, where they have a lot of operational complexity and they're looking for what can I really do with this.
We've shown that with safety, we're able to really show that now on the efficiency side, where we can really help you find signals and patterns in the data by having AI crunch through it and then using our kind of vast data outside as I was talking about what the workflow side of things. So I think they're very interested in the eyes of technology, but really as it applies to their operations and then what sort of savings.
Speaker Change: To help drive or what kind of risks can help reduce.
Speaker Change: Yeah.
Speaker Change: And then just one follow up for Don or similar and some other ones, but just visibility for you heading into the rest of the year. It sounded like you had a really good pipeline build quarter can you just talk a little events, our visibility maybe today versus three months ago or just kind of how you are feeling about sort of about the overall pipeline formation for the year, Yes, I mean, we're feeling good about the pipeline again.
Speaker Change: Taking a step back like big market growing quickly big opportunity for digital transformation, we add a ton of value for customers in terms of ROI.
Speaker Change: Very quickly and I think the pipeline demonstrates that the the customer demand and interest I think the visibility point is just around kind of what happens in the broader kind of macro environment and what impact does that have on our customers and therefore on there kind of a near term priority. So I think near term.
Speaker Change: The macro uncertainty provides.
Speaker Change: There's some timing risk deals.
Speaker Change: But more medium and long term, we feel really good about the position and the momentum.
Speaker Change: Great. Thank you.
Speaker Change: The next question comes from Jim Fish with Piper Sandler followed by Dan Jester with BMO.
Dan Jester: Hey, guys.
Speaker Change: Circling back on the OEM side, how should we think or how should we expect appropriate exclusivity you have with with the three that you have versus what you are looking to do with with other Oems and could we see more partnerships and then Tom for you around this I mean, I know Keith and has multiple multiple questions here asked around near term gross margins how should we think about.
Speaker Change: The impact of more longer term margin.
Speaker Change: I'm sure I'll cover the product side of things. So Oems more broadly speaking are embedding this connectivity, they're doing largely for their own reasons. They wanted to basically be able to service these assets more efficiently and get.
Speaker Change: Information back into the cloud.
Speaker Change: That's where the partnership's lie is directly with the OEM, it's kind of a cloud to cloud connection.
Speaker Change: The majority of these partnerships are not exclusive and I think it is just part of this kind of connected data strategy that many of them have that being said our customers are looking for a single pane of glass they want to not just see their trucks, but their construction equipment or refrigeration units they want to see it all in one place and that's really unique in terms of what we're able to offer in terms of the scale and breadth we have.
Speaker Change: A large number of these OEM partnerships and thats going to continue to be our strategy is get more folks onto the cloud.
Speaker Change: On the longer term gross margin question again today, it's not a significant part of our net new we see in any given period and so not a lot of impact to gross margins medium and longer term it could be it could be beneficial I would expect it to be more gross margin accretive then.
Speaker Change: Then that kind of that offering where we provide a device but.
Speaker Change: But we would need to see that kind of part of the business scale up dramatically and that's really driven by kind of customer customer interest.
Speaker Change: Got it.
Speaker Change: You guys called out the highest growth on transportation in four years I believe in the prepared remarks, but what were the drivers of that and I guess pun intended.
Speaker Change: Okay.
Speaker Change: You know I would say in general transportation is an industry, where efficiency and safety are really top priority. So theyre continuing to digitize, we've been gaining market share among the top in like leading transportation companies. So I think we're becoming better known it was.
Speaker Change: Another strong quarter I think it was our second largest vertical so we expect to see it continue to grow and there's a lot of trucks out there.
Dan Jester: Okay. The next question comes from Dan Jester with BMO, followed by Matt bulk would be there.
Dan Jester: Great. Thanks for taking my question.
Dan Jester: Maybe on the international side, great to hear the momentum in the business. There, maybe it's tough to break out, but I'd love just to hear your perspective on how much of that has just been from your building sales capacity in those regions versus some sort of discrete regulatory things that seem to be happening in Europe.
Speaker Change: Yeah, I'll take that one we have been investing in the region for some time, where we're excited to see 18% of net new ACD come from International Europe has been a good driver of that so we have achieved the product market fit and that's been over a couple of years I wouldn't say that there's any specific new regulatory tailwind other than <unk>.
Dan Jester: Now, we're seeing more interest in digital technologies and digital transformation than maybe we were seeing five years ago.
Speaker Change: Okay, great. Thank you and then on the preventative maintenance piece.
Speaker Change: Is that going to be something that's going to be targeted to specific.
Speaker Change: Types of businesses first or do you think that that's going to be useful for the entire industry sentiment you cover. Thank you.
Speaker Change: Yes, I think Dominic made the point earlier, but our customers across industries. They buy similar types of assets. If you think about the trucks. They shop with the same kinds of trucks in transportation is utilities and construction. So we do see kind of broad based use of this product feature set.
Speaker Change: And from there, we'll expand based on customer feedback, but we believe it's going to be quite general.
Speaker Change: Thank you.
Speaker Change: The next question comes from Matt Bullock with Bofa fall by Dylan Becker with William Blair.
Speaker Change: Great Hi, Thanks for taking the question I wanted to ask a quick one on the upgrade program you launched this quarter.
Speaker Change: Are there any incremental details you can provide on the program as it catalyzed conversations on potential displacements did it contribute to the pipeline expansion you saw in <unk> and then anything on incremental discounts through the program would be helpful.
Speaker Change: Sure. So what we've been doing for a couple of years is helping customers due to transition. Some of these customers have a legacy providers that they've been working with or they might be frustrated or looking for more functionality and so a number of these arrangements are three to five year contracts as customers are coming towards the end of them we've helped buyout.
Speaker Change: Contracts. So really this program is kind of making that a little more <unk>, making it easier on ramp. So that's the context, there and in this macroeconomic environment. I think people are looking to find ways to go drive that efficiency and find those savings and we want to make it easy for them to pick up so I'm trying to adopt it.
Speaker Change: That would be the high level I don't think it's fundamentally changed the discounting and deals or anything like that it's really just kind of made it easier for customers to understand we have an option for them if they're currently under contract with somebody else.
Speaker Change: Got it and then one quick follow up if I could could you provide an update on how the conversations are generally trending with some of those more strategic accounts those accounts with 100000 plus vehicles are those deals moving through the pipe.
Speaker Change: As expected what are you hearing from customers in general.
Speaker Change: Sure I'm happy to cover that one as well. So I think these customers are very interested in what we're doing they are large very complex operations. They often have many operating divisions and so for them to either make a change or adopt a new technology for some of these companies. They don't have digital technologies deployed across the entirety of their fleet, it's a lot of change manner.
Speaker Change: <unk>, So I would say it continues to progress in terms of how they're working on to funnel, but these are multiyear sales cycles. When you talk about strategic deals of that scale.
Speaker Change: Got it thank you.
Speaker Change: The next question comes from Dylan Becker with William Blair, followed by Mark Schappell with loop capital.
Speaker Change: Thanks, guys, Hey, its Andrew Tom Mike everybody.
Speaker Change: Maybe for you on the predictive or preventative piece I Wonder how you think about maybe in a tightening macro kind of the growing importance with fewer excess assets out there.
Speaker Change: The kind of the strategic value of that solution as maybe customers think about optimizing kind of throughput in and run time of existing assets and ensuring that those are fully operational for maybe as long as possible.
Speaker Change: I think you put your finger on it. So this is exactly what we're hearing from customers is in this kind of environment, where equipment is becoming either more expensive to procure lead times it might be changing they are really trying to drive up utilization and get as much value as they can and perhaps run these assets a little bit longer by maintaining them in a smarter way. So our technology is really help.
Speaker Change: With both of those Dominic mentioned this with asset tags, but are connected equipment portfolio in general we hope you understand what assets are being used where how often should you rebalance them and then as we're going deeper with our work in AI as it relates to fault codes and kind of diagnostics, that's an area, where we can help you.
Speaker Change: Essentially extend the lifespan of the effect of life.
Speaker Change: Life of these assets.
Speaker Change: Okay, great. Thank you and then maybe Tom for you too as we think about kind of the non vehicle strength in our business as well too can you give us a sense of maybe the directional kind of attach where we sit today and maybe how you expect that to trend as well too as more of these larger enterprise customers tend to land kind of multi product in nature.
Speaker Change: Yeah, it's been it's been pretty consistent it's kind of.
Tom: In the mid teens in terms of overall <unk>, we're continuing to grow and scale monitoring another in all of these other kind of workflow applications. I think the usage continues to be much higher than the than the ALR mix, so more than 50% of our core customers and more than two thirds of our large customers are using a non vehicle based.
Tom: And we're seeing that adoption pick up as we release more and more of these these new products and so I think that that gives us a lot of excitement about the ability to kind of go more wall to wall and some of these customers with these non vehicle assets to to increase that overall our mix over time.
Tom: Great. Thank you both appreciate it.
Speaker Change: The next question comes from Mark shaped ball with loop capital fall by Alexia <unk> with Jpmorgan.
Speaker Change: Alright. Thank you for taking my question Sanjay I, just wonder if you could just circle back on the international opportunity. It's good to see the strength in Europe. This quarter I'm wondering if you could give us a better sense, though where Europe is with respect to the U S. In areas such as like video May safety or Nextgen telematics.
Speaker Change: How far behind for example are they in your view and also to do you see a different set of competitors over there.
Sanjay I: Sure. So I would say first of all our presence in the European market is a little uneven in the sense that we've been in the UK and Ireland, the longest and Thats, where we have the most presence there. There's I think good acceptance of video based safety to very uncomfortable with connect cameras.
Sanjay I: And really whats different is perhaps.
Sanjay I: How mature their driver safety coaching programs on things like that but they're not very far behind it. It's very similar to what we see in the U S. It's a little different on the continent in terms of in France, and Germany those are newer markets for us.
Sanjay I: We're making good headway, there and I think there.
Speaker Change: We've also seen certain industry verticals pick up the technology, a little bit sooner and faster and so I would say it still feels relatively early for us as we're a couple of years in the market.
Speaker Change: And I think I don't know Dominic if you want to add anything on Europe.
Speaker Change: I just I think it's been a number of years of solid kind of investment focus and execution, obviously, we talked about launching a few new products.
Speaker Change: In Europe, the brightest that bridge striking alert alerting in the electronic brake monitoring we've also been landing more and more lighthouse customers you've heard us talk about companies like Vinci Fortune 500, construction company and a number of others and so just a lot of kind of steady progress in investment there and I think the second half of your question was around competition. It is a <unk>.
Speaker Change: <unk> set of competitors there they tend to be more regionally focused and so we're showing up with a fairly mature technology platform has a lot of functionality and we're in the process of tweaking the product to meet the needs of each region.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: The next question comes from Alexia <unk> with.
Speaker Change: With J P. Morgan followed by ask Alex Sklar with Raymond James.
Speaker Change: Okay.
Speaker Change: Alexia.
Speaker Change: Okay, Let's go to Alex with Raymond James.
Speaker Change: Great. Thanks, Dominic on the dollar based net retention another strong quarter at 115% and that's another.
Speaker Change: Okay, I think we lost Alex there, let's go with Derek Wood with TD Cowen.
Speaker Change: Derek.
Speaker Change: Thanks.
Speaker Change: Hopefully that hasnt been asked but just what's the extra market uncertainty out there.
Speaker Change: I'm wondering if perhaps in times like this there could this opens up a window to gain share from legacy vendors.
Speaker Change: Just I'm curious kind of what youre seeing out of the competitive landscape and kind of do you have new strategies to look to drive up.
Speaker Change: When rates are competitive displacements I don't think it's it's terribly different than then when there is more macro stability and again I think we're coming as Zane just said with a platform with a lot of kind of functionality and often cases customers have not adopted any sort of digital technology around there they are off.
Speaker Change: Operations, and we've got a market leading product and so.
Speaker Change: I don't think that's any different now versus other other periods of time I think just more broadly that the kind of prioritization for customers with a lot of uncertainty around there near term.
Speaker Change: Cost structure can you just great timing risk on some deals.
Speaker Change: Sure Don.
Speaker Change: Just a follow up too.
Speaker Change: I know you guys have indicated that you expected to temper hiring.
Speaker Change: This year.
Speaker Change: Any change in how to think about head count growth plans and has that changed since the beginning of the year.
Speaker Change: No changes from the beginning of the year I think just as a reminder, I think over the last couple of years, we really didn't make coming out of Covid, we really were kind of behind on on hiring and we really use the last couple of years as catch up years and so this year was much more it was planned to and continues to be planned it to be more of a balanced year, where productivity has been.
Speaker Change: <unk>.
Speaker Change: Solid in Q1 and gives us the.
Speaker Change: Confidence to continue to add sales capacity, but we're kind of on track with what we expected at.
Speaker Change: At the beginning of the year.
Speaker Change: Okay.
Alex Zukin: So, let's go back to Alex and Sham again Disconnections back.
Speaker Change: Great. Thank you can you all hear me yeah.
Speaker Change: Sorry about that so on the dollar based net retention 115 again, another strong quarter and is that still the right anchor for the rest of the year and then when you look at the drivers behind that any change in terms of contribution from growth in vehicles or units versus solutions versus kind of pricing at renewal.
Speaker Change: No Yeah, I think that's still our target for the year, we were able to achieve that in Q1, and that's what we're expecting for the rest of the year similar to previous quarters and years more of our expansion tends to come from.
Speaker Change: From Upsells of existing licenses, so customers will land with multiple products out of the gate, but they'll just do it on a subset of their their assets or their their their workers and then over time they'll come back and they'll buy more licenses of their existing products.
Speaker Change: Across a broader set of assets, whether it's geographies or different operating companies and that's what we saw in Q1.
Speaker Change: Okay, Great and then maybe for you Andrew you called out accelerating results from the field services end market you had some PR earlier this week on that end market as well.
Speaker Change: Can you just talk about your focus there or any particular solutions that you're focused on that are more tailored to that end market versus some of your others.
Speaker Change: Well it continues to be an area of interest so in field services. The operations are a little different than in transportation logistics they have more <unk>.
Speaker Change: Site visits they have more equipment, so areas like the asset tag or new products like gas attack are helpful. There in terms of filling out the portfolio. They're also now starting to adopt driver safety historically it had been industries like long haul transportation that about cameras. Most of the market. If you think about most of the commercial vehicles on the road 80, 90% of them.
Speaker Change: Don't have any kind of connected driver safety coaching program.
Speaker Change: Our field services customers, they think of their teams Morris technicians or workers as opposed to drivers and they are starting to see that they could actually reduce risk with technologies like this so I think it's really just this is a segment of the market that's kind of activating and adopting these new technologies.
Speaker Change: Alright, Thank you Mark.
Speaker Change: The next question comes from John aid with tourists, followed by let's say with JP Morgan.
Speaker Change: Great. Thank you for taking my question.
Speaker Change: So Andy I, just wanted to ask about the adoption of some of your products around worker experience like workflows and training and how they're contributing to increased platform sales. Thank you.
Speaker Change: Sure. So on the workflow side I mentioned earlier there are some fairly standard workflows, we see hundreds of millions flow through our system on so good adoption of those kind of digital technologies I think there is.
Speaker Change: Increasing sort of awareness among the frontline workers in the market that digital is better it's a better experience for them. They can attach photos from their smartphone and so on so that's been really strong we've enhanced that with some more recent AI functionality, where we can now it's visual intelligence feature where we can understand what exactly is <unk> from <unk>.
Speaker Change: <unk>, so that's an area, where we're seeing a lot of interest.
Speaker Change: And on the training side, that's really part of this broader worker safety pushed that I was talking about earlier you can see risk reduction come from in cap coaching you can see it come from.
Speaker Change: Sit down coaching as well, but then being able to do relevant trainings, especially on a mobile device, especially in context of what's happened that results in additional risk reduction and we're seeing customers start to realize that and thats.
Speaker Change: Drawing some of those sales through.
Speaker Change: Great. Thank you.
Speaker Change: Okay. Our last question today comes from Alexia <unk> with JP Morgan.
Speaker Change: Thank you Mike.
Speaker Change: I had a question about this massive win with one of the largest counties.
Speaker Change: <unk> already provided the border of existing examples, but anything specific about that customer.
Speaker Change: The feature set this customer was looking for.
Speaker Change: Was that decision perhaps related to the natural disasters in the area.
Speaker Change: Sure I would say there is really kind of two key use cases in that specific example, one is around just driving higher levels of efficiency, that's a better understanding of asset utilization reducing areas like fuel consumption. So that that would be one kind of cluster of interest from the customer.
Speaker Change: I will say for some of these counties that are in.
Speaker Change: Hazardous areas, where they get affected by natural disasters being able to locate assets like generators. For example, after a storm is very valuable and then we.
Speaker Change: We've shared a case study of the city of New Orleans for example.
Speaker Change: They are trying to keep their citizens safe being able to know where all of these teams are at all times.
Speaker Change: Helpful, especially as disastrous scenario, so efficiency, but also being able to.
Speaker Change: Reactive.
Speaker Change: Responsive for their citizens.
Speaker Change: Thank you Sanjay.
Speaker Change: Greg. This concludes our question and answer portion. Thank you all for attending our Q1 fiscal year 2026 earnings call before I. Let you go out in a few short announcements first we will be attending the BMO virtual software conference on June 19th the Mizuho Tech Conference in New York City on June 10th and the SDN Virtual software conference on <unk>.
Speaker Change: 11th we hope to see at one of these events.
Speaker Change: Second we are hosting our Investor day on June 24th in San Diego, where we will provide additional insights into sensors trajectory and overall see the physical operations. Please send an email to IR at Sam startup com, if you're interested in attending in person, but the huge who prefer to attend virtually our investor Relations website, we will have a link to a live broadcast.
Speaker Change: So for today's meeting if any follow up questions you can email us at IR at Sam sorry, Dot com by everyone.