Samsara Inc.: Form 10-Q for the period ended Nov 1, 2025

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our audited consolidated financial statements and related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended February 1, 2025 included in our Annual Report on Form 10-K filed with the SEC on March 25, 2025, and (2) our unaudited condensed consolidated financial statements and related notes and other financial information included under Part I, Item 1 of this Quarterly Report on Form 10-Q. Some of the information contained in the following discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Item 1A. Risk Factors” and “Special Note Regarding Forward-Looking Statements” contained in this Quarterly Report on Form 10-Q and “Risk Factors” included under Part I, Item 1A. of our Annual Report on Form 10-K filed with the SEC on March 25, 2025, as supplemented by our subsequent quarterly reports on Form 10-Q, for a discussion of forward-looking statements and important factors that could impact our business and cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis or implied by past results and trends. These statements, like all statements in this Quarterly Report on Form 10-Q, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments. Our fiscal year ends on the Saturday closest to February 1, resulting in a 52-week or 53-week fiscal year. Our fiscal years 2026 and 2025 each consist of 52 weeks, with the fourth quarter consisting of 13 weeks, and our fiscal year 2024 consisted of 53 weeks, with the fourth quarter consisting of 14 weeks.

Overview

Samsara is on a mission to increase the safety, efficiency, and sustainability of the operations that power the global economy.

To realize this vision, we pioneered the Connected Operations Platform, which is an open platform that connects the people, devices, and systems of some of the world’s most complex operations, allowing them to develop actionable insights and improve their operations.

Our Connected Operations Platform consolidates data from our IoT devices and a growing ecosystem of connected assets and third-party systems, and makes it easy for organizations to access, analyze, and act on data insights using our cloud dashboard, custom alerts and reports, mobile apps, and workflows. Our differentiated, purpose-built suite of Applications enables organizations to embrace and deploy a digital, cloud-connected strategy across their operations. With Samsara, customers have the ability to drive safer operations, increase business efficiency, and achieve their sustainability goals, all to improve the lives of their employees and the customers they serve.

We were founded in 2015 and have achieved significant growth since our inception. For the three months ended November 1, 2025 and November 2, 2024, our revenue was $416.0 million and $322.0 million, respectively. Our net income was $7.8 million for the three months ended November 1, 2025, and our net loss was $37.8 million for the three months ended November 2, 2024. For the nine months ended November 1, 2025 and November 2, 2024, our revenue was $1,174.3 million and $902.9 million, respectively. Our net loss was $31.2 million and $143.7 million for the nine months ended November 1, 2025 and November 2, 2024, respectively. Our business model focuses on maximizing the lifetime value of our customer relationships, and we continue to make significant investments to expand our customers’ use of our Connected Operations Platform.

Key Business Metrics

The following table shows a summary of our key business metrics as of the periods presented (dollars in thousands):

(1) Customer count previously disclosed for prior period has been adjusted to reflect the updated definition of customer as described below under “Number of Customers Over $100,000 in ARR.”

ARR

We believe that ARR is a key indicator of the trajectory of our business performance, enables measurement of the progress of our business initiatives, and serves as an indicator of future growth. We define ARR as the annualized value of subscription contracts that have commenced revenue recognition as of the measurement date. ARR highlights trends that may be less visible from our financial statements due to ratable revenue recognition. ARR does not have a standardized meaning and is not necessarily comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and is not intended to be combined with or replace it. ARR is not a forecast, and the active contracts at the date used in calculating ARR may or may not be renewed. For all international customer contracts denominated in currencies other than the U.S. dollar, ARR is translated from local currency to U.S. dollar based on the currency exchange rate as of the effective date of the contract.

Number of Customers Over $100,000 in ARR

We focus on customers representing over $100,000 in ARR, as this key business metric is indicative of our penetration with larger customers. The number of our customers over $100,000 in ARR has grown over time as we have focused our sales efforts on larger customers, invested in our partner ecosystem, and released more Applications to address the needs of our larger customers.

To better reflect the structure of our largest enterprise customers, who often have multiple subsidiaries and grow through mergers and acquisitions, we adjusted our definition of a customer in the fiscal quarter ended May 3, 2025. Previously, separate entities within a larger organization were counted as individual customers. We now define a customer as an entity, or group of affiliated entities with a shared parent organization, that has ARR of greater than $1,000 at the end of a reporting period. This better aligns with our current go-to-market strategy and how we assign sales representatives to customer accounts. Determinations regarding the relationship between customer entities are primarily based on publicly available information and information supplied to us by our customers, and we have not independently verified the legal relationship between entities in all cases. Our customer count is subject to adjustments for mergers and acquisitions, spin-offs, segmentation by geography, and other market and commercial activity.

Factors Affecting Our Performance

Acquiring New Customers

We believe that we have a substantial opportunity to continue to grow our customer base. We intend to drive new customer acquisition by continuing to invest significantly in sales and marketing to engage our prospective customers, increase brand awareness, and drive adoption of our Connected Operations Platform. Our ability to attract new customers depends on a number of factors, including the effectiveness of our sales and marketing efforts, macroeconomic factors and their impact on our customers’ businesses, and the success of our efforts to expand internationally.

Expanding Within Our Existing Customer Base

We believe that there is a significant opportunity to expand sales to existing customers following their initial adoption of our Connected Operations Platform. We expand within our customer base by selling more Applications and expanding existing Applications across geographies and divisions. Our ability to expand within our customer base will depend on a number of factors, including our customers’ satisfaction, pricing, competition, macroeconomic factors, and changes in our customers’ spending levels.

Investments in Innovation and Future Growth

Our performance is driven by continuous innovation on our Connected Operations Platform and our ability to scale our operations to grow our business. We continuously invest in adding new data types to our Connected Operations Platform and innovate with this growing data asset to introduce new Applications over time. Our performance is also impacted by our ability to scale our operations across our business to support our growth. We remain committed to investing in our sales and marketing capacity, investing in world-class talent and productivity tools within our research and development organization, and driving revenue growth globally.

Macroeconomic Trends

Unfavorable conditions in the economy, both in the United States and abroad, may negatively affect the growth of our business and our results of operations. For example, our business and results of operations, as well as those of our customers, could be affected by global macroeconomic trends and events such as inflationary pressure, fluctuations in foreign currency exchange rates, interest rate increases and declines in consumer confidence, widespread disruptions of supply chains and freight and shipping channels, increased prices for many goods and services (including fluctuating hardware component and fuel costs), labor shortages, delayed or reduced spending on technology, and significant volatility and disruption of financial markets, as well as other conditions arising from international conflicts, such as the ongoing conflict between Russia and Ukraine, conflicts in the Middle East, and geopolitical tensions involving China, the outcome of political elections, and new monetary, fiscal, and trade policies (including tariff policies and import and export restrictions) in the United States and abroad. We are continuously monitoring these global events and other macroeconomic developments and how they may impact us directly or indirectly as a result of the effects on our customers and suppliers.

Refer to the section titled “Item 1A. Risk Factors” and “Special Note Regarding Forward-Looking Statements” contained in this Quarterly Report on Form 10-Q and “Risk Factors” included under Part I, Item 1A and elsewhere in our Annual Report on Form 10-K filed on March 25, 2025, as supplemented by our subsequent quarterly reports on Form 10-Q, for further discussion of the impacts of macroeconomic trends on our business.

Components of Results of Operations

Revenue

We provide access to our Connected Operations Platform through subscription arrangements, whereby the customer is charged a per-subscription fee for access for a specified term. Subscription agreements contain multiple service elements for one or more of our cloud-based Applications via mobile app(s) or a website that enable data collection and provide access to the cellular network, IoT devices (which we also refer to as connected devices), and support services delivered over the term of the arrangement. Our subscription contracts typically have an initial term of three to five years and are generally non-cancelable and non-refundable, subject to limited exceptions under our standard terms of service and other exceptions for public sector customers, who are often subject to annual budget appropriations cycles. Our Connected Operations Platform and IoT devices are highly interdependent and interrelated, and represent a combined performance obligation within the context of the contract.

In each of our past two fiscal years, we generated approximately 98% of our revenue from subscriptions to our Connected Operations Platform. The remaining portion of our revenue not generated from subscriptions to our Connected Operations Platform is derived from the sale of replacement IoT devices, shipping and handling fees, and professional services.

Cost of Revenue

Cost of revenue consists primarily of the amortization of connected device costs associated with subscription agreements, third-party cloud and cellular costs, employee-related costs directly associated with our customer support and operations, including salaries, benefits and stock-based compensation, amortization of internal-use software costs, fulfillment costs, warranty costs, write-downs of excess and obsolete inventory, and costs associated with software subscriptions and office facilities.

As our customers expand and increase the use of our Connected Operations Platform driven by additional IoT devices and Applications, our cost of revenue may vary from quarter to quarter as a percentage of our revenue due to the timing and extent of these expenses. We intend to continue to invest additional resources in our Connected Operations Platform and customer support and operations as we grow our business. The level and timing of investment in these areas will affect our cost of revenue in the future.

Operating Expenses

Research and Development

Research and development expenses consist primarily of employee-related costs, including salaries, benefits and stock-based compensation, associated with improvements to our platform and the development of new product offerings, expenses directly related to the development of our products, and costs associated with software subscriptions and office facilities. We continue to focus our research and development efforts on adding new features and products and enhancing the utility of our Connected Operations Platform.

We expect our research and development expenses to generally increase in absolute dollars for the foreseeable future as we continue to invest in research and development efforts to enhance our Connected Operations Platform. Our research and development expenses have fluctuated in the past and may in the future fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.

Sales and Marketing

Sales and marketing expenses consist primarily of employee-related costs, including salaries, benefits, stock-based compensation, and sales commissions, incurred to acquire and retain new customers and increase product adoption with our existing customers. Sales and marketing expenses also include marketing activities, promotional events, and costs associated with software subscriptions and office facilities.

We plan to continue to invest in sales and marketing to expand our customers’ use of our Connected Operations Platform and increase our brand awareness. As a result, we expect our sales and marketing expenses to generally increase in absolute dollars for the foreseeable future. Our sales and marketing expenses have fluctuated in the past and may in the future fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses, including seasonally higher spend on promotional events in the first half of our fiscal year.

General and Administrative

General and administrative expenses consist primarily of employee-related costs for executive, finance, legal, human resources, facilities, and certain IT personnel, including salaries, benefits and stock-based compensation. General and administrative expenses also include costs related to fees paid for professional services, including legal, accounting, recruiting and other consulting services, as well as costs associated with software subscriptions and office facilities.

We expect our general and administrative expenses to continue to increase in absolute dollars for the foreseeable future to support our growth. Our general and administrative expenses have fluctuated in the past and may in the future fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.

Lease Modification, Impairment, and Related Charges

Lease modification, impairment, and related charges consist of impairment charges related to the sublease and abandonment of facilities.

We may incur additional lease modification, impairment, and related charges in subsequent periods.

Interest Income and Other Income, Net

Interest income and other income, net, consists primarily of income earned on our money market funds and marketable debt securities, including amortization of premiums and accretion of discounts. It also includes the effect of changes in foreign currency exchange rates. As we have expanded our global operations, our exposure to fluctuations in foreign currencies has increased, and we expect this to continue.

Provision for Income Taxes

Provision for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business. We maintain a full valuation allowance against our U.S. deferred tax assets because we have concluded that it is more likely than not that the deferred tax assets will not be realized.

Results of Operations

Comparison of the Three and Nine Months Ended November 1, 2025 and November 2, 2024

Revenue

Our total revenue is summarized as follows (in thousands, except percentages):

Revenue increased by $94.0 million and $271.4 million, or 29% and 30%, for the three and nine months ended November 1, 2025, respectively, compared to the three and nine months ended November 2, 2024, primarily due to an increase in new customers and increased purchases of subscriptions to our Connected Operations Platform, including subscriptions to additional Applications, by existing customers.

Cost of Revenue, Gross Profit, and Gross Margin

Our cost of revenue, gross profit, and gross margin are summarized as follows (in thousands, except percentages):

Cost of revenue increased by $20.9 million, or 28%, for the three months ended November 1, 2025 compared to the three months ended November 2, 2024, primarily due to $9.7 million of increased cloud and cellular costs associated with our product offerings and $7.4 million of increased connected device costs. The increases in cloud and cellular costs and connected device costs were primarily due to increased sales volume year-over-year.

Our gross margin increased to 77% for the three months ended November 1, 2025 compared to 76% for the three months ended November 2, 2024, mainly due to operational efficiencies in direct labor costs and connected device costs.

Cost of revenue increased by $52.6 million, or 24%, for the nine months ended November 1, 2025 compared to the nine months ended November 2, 2024, primarily due to $24.0 million of increased cloud and cellular costs associated with our product offerings, $19.6 million of increased connected device costs, and $4.5 million of increased employee-related costs, which included a $3.3 million increase in salaries and benefits and related employer taxes and a $1.2 million increase in stock-based compensation expense. The increases in cloud and cellular costs and connected device costs were primarily due to increased sales volume year-over-year.

Our gross margin increased to 77% for the nine months ended November 1, 2025 compared to 76% for the nine months ended November 2, 2024, mainly due to operational efficiencies in connected device costs and direct labor costs.

Research and Development

Research and development expense is summarized as follows (in thousands, except percentages):

Research and development expense increased by $9.2 million, or 12%, for the three months ended November 1, 2025 compared to the three months ended November 2, 2024, primarily due to a $4.6 million increase in employee-related costs, which included a $4.0 million increase in stock-based compensation expense and a $0.6 million increase in salaries and benefits and related employer taxes, primarily due to increased headcount. The increase in research and development expense was also due to a $2.0 million increase in cloud and cellular costs associated with product development and a $1.6 million increase in costs associated with software subscriptions and office facilities.

Research and development expense increased by $28.6 million, or 13%, for the nine months ended November 1, 2025 compared to the nine months ended November 2, 2024, primarily due to a $17.1 million increase in employee-related costs, which included a $11.5 million increase in stock-based compensation expense and a $5.6 million increase in salaries and benefits and related employer taxes, primarily due to increased headcount. The increase in research and development expense was also due to a $4.8 million increase in cloud and cellular costs associated with product development and a $3.7 million increase in costs associated with software subscriptions and office facilities.

Sales and Marketing

Sales and marketing expense is summarized as follows (in thousands, except percentages):

Sales and marketing expense increased by $18.3 million, or 12%, for the three months ended November 1, 2025 compared to the three months ended November 2, 2024, primarily due to a $11.8 million increase in employee-related costs, which included a $8.2 million increase in salaries and benefits and related employer taxes and a $5.1 million increase in sales commissions, primarily due to increased headcount, partially offset by a $1.5 million decrease in stock-based compensation expense, primarily due to the impact of forfeitures. The increase in sales and marketing expense was also due to a $6.1 million increase in expenditures incurred to generate demand through various marketing channels and promotional events.

Sales and marketing expense increased by $58.9 million, or 13%, for the nine months ended November 1, 2025 compared to the nine months ended November 2, 2024, primarily due to a $46.8 million increase in employee-related costs, which included a $27.6 million increase in salaries and benefits and related employer taxes, a $13.2 million increase in sales commissions, and a $6.0 million increase in stock-based compensation expense, primarily due to increased headcount. The increase in sales and marketing expense was also due to a $8.9 million increase in expenditures incurred to generate demand through various marketing channels and promotional events, including our annual conference.

General and Administrative

General and administrative expense is summarized as follows (in thousands, except percentages):

General and administrative expense increased by $3.5 million, or 6%, for the three months ended November 1, 2025 compared to the three months ended November 2, 2024, primarily due to a $2.2 million increase in stock-based compensation expense due to increased headcount. The increase in general and administrative expense was also due to a $0.8 million increase in consulting and professional services fees.

General and administrative expense increased by $24.9 million, or 14%, for the nine months ended November 1, 2025 compared to the nine months ended November 2, 2024, primarily due to a $12.7 million increase in employee-related costs, which included a $8.4 million increase in stock-based compensation expense and a $4.3 million increase in salaries and benefits and related employer taxes, primarily due to increased headcount. The increase in general and administrative expense was also due to a $12.2 million increase in consulting and professional services fees.

Lease Modification, Impairment, and Related Charges

Lease modification, impairment, and related charges are summarized as follows (in thousands, except percentages):

In the third quarter of fiscal year 2025, we executed a sublease for certain office space that resulted in a $3.6 million impairment to the related right-of-use (“ROU”) asset and fixed assets, which we recognized in lease modification, impairment, and related charges for the three and nine months ended November 2, 2024. There were no lease modification, impairment, and related charges for the three and nine months ended November 1, 2025.

Interest Income and Other Income, Net

Interest income and other income, net, are summarized as follows (in thousands, except percentages):

Interest income and other income, net, increased by $0.8 million, or 8%, for the three months ended November 1, 2025 compared to the three months ended November 2, 2024. This increase was impacted by $0.9 million in higher interest income due to a 22% increase in our marketable debt securities and money market funds balances, partially offset by the impact of interest rate fluctuations.

Interest income and other income, net, increased by $5.2 million, or 17%, for the nine months ended November 1, 2025 compared to the nine months ended November 2, 2024. This increase was favorably impacted by $2.8 million in higher foreign currency gains and $2.6 million in higher interest income earned on a larger balance of our marketable debt securities and money market funds.

Provision for Income Taxes

Provision for income taxes is summarized as follows (in thousands, except percentages):

The provision for income taxes increased by $0.8 million and $2.6 million, or 170% and 137%, for the three and nine months ended November 1, 2025, respectively, compared to the three and nine months ended November 2, 2024, primarily due to the growth of our operations in foreign jurisdictions.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), we review the following non-GAAP financial measures to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions (in thousands, except percentages):

Limitations and Reconciliations of Non-GAAP Financial Measures

Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under GAAP. There are a number of limitations related to the use of non-GAAP financial measures versus comparable financial measures determined under GAAP. For example, other companies in our industry may calculate these non-GAAP financial measures differently or may use other measures to evaluate their performance. In addition, free cash flow does not reflect our future contractual commitments or the total increase or decrease of our cash balance for a given period. These and other limitations could reduce the usefulness of these non-GAAP financial measures as analytical tools. Investors are encouraged to review the related GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures and to not rely on any single financial measure to evaluate our business.

Expenses Excluded from Non-GAAP Performance Financial Measures

Stock-based compensation expense-related charges include the amortization of deferred stock-based compensation expense for capitalized software and cloud computing arrangements and employer taxes on employee equity transactions. Stock-based compensation expense is a non-cash expense and is dependent on our stock price, which is beyond our control. Accordingly, we find it useful to exclude stock-based compensation expense in order to better understand our ongoing operational performance. Employer taxes on employee equity transactions, which are a cash expense, are excluded because such taxes are directly tied to the timing and size of employee equity transactions and the future fair market value of our common stock, which may vary from period to period independent of the operating performance of our business.

Lease modification, impairment, and related charges, and legal settlements are excluded because management believes that such charges are not reflective of our ongoing operational performance.

Non-GAAP Performance Financial Measures

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We define non-GAAP gross profit as gross profit excluding the effect of stock-based compensation expense-related charges included in cost of revenue. Non-GAAP gross margin is defined as non-GAAP gross profit as a percentage of total revenue. We use non-GAAP gross profit and non-GAAP gross margin in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations. The following table presents a reconciliation of our non-GAAP gross profit to our GAAP gross profit for the periods presented (in thousands, except percentages):

(1) Stock-based compensation expense-related charges included approximately $0.2 million and $0.3 million of employer taxes on employee equity transactions for the three months ended November 1, 2025 and November 2, 2024, respectively.

Non-GAAP Operating Income (Loss) and Non-GAAP Operating Margin

We define non-GAAP operating income (loss) as operating income (loss) excluding the effect of stock-based compensation expense-related charges, lease modification, impairment, and related charges, and legal settlements. Non-GAAP operating margin is defined as non-GAAP operating income (loss) as a percentage of total revenue. We use non-GAAP operating income (loss) and non-GAAP operating margin in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that non-GAAP operating income (loss) and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations. The following table presents a reconciliation of our non-GAAP operating income to our GAAP loss from operations for the periods presented (in thousands, except percentages):

(1) Stock-based compensation expense-related charges included approximately $2.7 million and $4.5 million of employer taxes on employee equity transactions for the three months ended November 1, 2025 and November 2, 2024, respectively.

Non-GAAP Net Income (Loss)

We define non-GAAP net income (loss) as net income (loss) excluding the effect of stock-based compensation expense-related charges, lease modification, impairment, and related charges, and legal settlements. We use non-GAAP net income (loss) in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that non-GAAP net income (loss) provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations. The following table presents a reconciliation of our non-GAAP net income to our GAAP net income (loss) for the periods presented (in thousands, except percentages):

(1) There were no material income tax effects on our non-GAAP adjustments for all periods presented.

Non-GAAP Liquidity Financial Measures

Free Cash Flow and Free Cash Flow Margin

We define free cash flow as net cash provided by (used in) operating activities reduced by cash used for purchases of property and equipment. Free cash flow margin is calculated as free cash flow as a percentage of total revenue. We believe that free cash flow and free cash flow margin, even if negative, are useful in evaluating liquidity and provide information to management and investors about our ability to fund future operating needs and strategic initiatives. The following table presents a reconciliation of free cash flow to net cash provided by operating activities for the periods presented (in thousands, except percentages):

Liquidity and Capital Resources

Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations.

Since our founding, we have financed our operations primarily through the sale of equity securities and payments received from our customers. In December 2021, we completed our initial public offering (“IPO”), which resulted in aggregate net proceeds of $846.7 million, including proceeds from the underwriters’ exercise of their option to purchase additional shares of our Class A common stock in January 2022 and net of underwriting discounts and commissions. We have generated significant operating losses from our operations, as reflected in our accumulated deficit of $1,641.2 million as of November 1, 2025. We intend to continue investing in our business, and as a result, we may require additional capital resources to execute on our strategic initiatives to grow our business, particularly if we generate negative cash flows in future quarters. We believe that our existing cash, cash equivalents, and short-term and long-term investments will be sufficient to support working capital, including our non-cancelable arrangements, and capital expenditure requirements for at least the next 12 months.

As of November 1, 2025, our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments of $1,147.2 million. Cash and cash equivalents consisted of cash as well as highly liquid investments with an original maturity of 90 days or less, when purchased. Our investments primarily consisted of U.S. government and agency securities, corporate notes and bonds, and commercial paper. Our primary uses of cash include employee-related expenditures, third-party cloud and cellular costs, sales and marketing expenses, overhead expenses, and funding other working capital requirements, such as inventory and related connected device costs to meet our performance obligations related to our Connected Operations Platform.

Our future capital requirements will depend on many factors, including, but not limited to, our growth, our ability to attract and retain customers, the continued market acceptance of our solution, the timing and extent of spending necessary to support our efforts to develop our Connected Operations Platform and meet our performance obligations related to customers, the expansion of sales and marketing activities, and the impact of macroeconomic conditions on our and our customers’ and partners’ businesses. Further, we may in the future enter into arrangements to acquire or invest in businesses, products, services, and technologies. We may be required to seek additional equity or debt financing. In the event that additional financing is required, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition, and results of operations could be adversely affected.

Cash Flows

The following table shows a summary of our cash flows for the periods presented (in thousands):

Operating Activities

Our largest source of operating cash is payments received from our customers. Our primary uses of cash from operating activities are for employee-related expenditures, sales and marketing expenses, inventory and related connected device costs, third-party cloud and cellular costs, and overhead expenses. Although we generated positive operating cash flows beginning in fiscal year 2025, we generated negative cash flows from operations in the preceding two fiscal years. We have supplemented working capital through net proceeds from the sale of equity securities.

Cash provided by operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation, depreciation and amortization of property and equipment, net accretion of discounts on marketable debt securities, and non-cash operating lease costs, and changes in operating assets and liabilities during each period.

Cash provided by operating activities was $166.5 million for the nine months ended November 1, 2025. This consisted of a net loss of $31.2 million, adjusted for non-cash charges of $248.6 million, and changes in our operating assets and liabilities of $51.0 million. The non-cash charges were primarily composed of stock-based compensation expense of $236.1 million and depreciation and amortization of $16.6 million. Changes in our operating assets and liabilities during the nine months ended November 1, 2025 reflect an increase in accounts receivable from customers, connected device costs, and deferred commissions due to the growth of our business, an increase in inventory levels to meet anticipated demand requirements, partially offset by increases in deferred revenue due to the growth of our business during the nine months ended November 1, 2025.

Cash provided by operating activities was $77.8 million for the nine months ended November 2, 2024. This consisted of a net loss of $143.7 million, adjusted for non-cash charges of $220.1 million, and changes in our operating assets and liabilities of $1.4 million. The non-cash charges were primarily composed of stock-based compensation expense of $208.9 million, depreciation and amortization of $15.8 million, and lease modification, impairment, and related charges of $3.6 million, partially offset by net accretion of discounts on marketable debt securities of $12.2 million. Changes in our operating assets and liabilities during the nine months ended November 2, 2024 reflect increases in deferred revenue due to the growth of our business and lower prepaid expenses and other current assets, partially offset by increased accounts receivable from customers, higher levels of inventories to meet anticipated demand requirements, higher deferred commissions, higher connected device costs, and higher vendor payments during the nine months ended November 2, 2024.

Investing Activities

Cash used in investing activities was $134.7 million for the nine months ended November 1, 2025, which primarily consisted of $643.1 million of purchases of investments and $20.7 million of capital expenditures for internal-use software costs and our office facilities, partially offset by $530.4 million of proceeds from maturities and redemptions of investments.

Cash used in investing activities was $67.1 million for the nine months ended November 2, 2024, which primarily consisted of $526.1 million of purchases of investments and $14.8 million of capital expenditures for internal-use software costs and our office facilities, partially offset by $472.8 million of proceeds from maturities and redemptions of investments and $1.2 million of proceeds from sales of investments.

Financing Activities

Cash provided by financing activities was $17.9 million for the nine months ended November 1, 2025, which primarily consisted of $18.7 million of proceeds from employee stock purchases under the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) and exercises of stock options, partially offset by $0.8 million in payments of principal on finance leases.

Cash provided by financing activities was $15.6 million for the nine months ended November 2, 2024, which primarily consisted of $17.0 million of proceeds from employee stock purchases under the 2021 ESPP and exercises of stock options, partially offset by $1.3 million in payments of principal on finance leases.

Contractual Obligations and Commitments

Our estimated future obligations consist of leases and non-cancelable purchase commitments as of November 1, 2025. For additional discussion on our leases and other commitments, refer to Notes 8, “Leases,” and 9, “Commitments and Contingencies,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Critical Accounting Estimates

Our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP.

The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.

There were no material changes to our critical accounting estimates during the nine months ended November 1, 2025.

Recent Accounting Pronouncements

For information on recently issued accounting pronouncements, see Note 2, “Summary of Significant Accounting Policies,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We are exposed to market risks in connection with our business, which primarily relate to fluctuations in interest rates and foreign exchange and inflation risks.

Interest Rate Risk

As of November 1, 2025, we had $1,147.2 million of cash, cash equivalents, and short-term and long-term investments in a variety of marketable debt securities, including U.S. government and agency securities, corporate notes and bonds, and commercial paper. In addition, we had $21.3 million of restricted cash primarily due to outstanding letters of credit. Our cash, cash equivalents, and short-term and long-term investments are held for working capital purposes. We do not enter into investments for trading or speculative purposes. Our cash equivalents and our portfolio of marketable debt securities are subject to market risk due to changes in interest rates. A hypothetical 100 basis point increase or decrease in interest rates would have resulted in a decrease of $7.9 million or an increase of $7.9 million in the market value of our cash equivalents and short-term and long-term investments as of November 1, 2025.

As of February 1, 2025, we had $977.5 million of cash, cash equivalents, and short-term and long-term investments, and a hypothetical 100 basis point increase or decrease in interest rates would have resulted in a decrease or an increase of $6.3 million in the market value.

Foreign Currency Exchange Risk

Our reporting currency is the U.S. dollar. The functional currency of our wholly-owned foreign subsidiaries is the U.S. dollar or the Mexican peso. A substantial majority, but not all, of our sales are denominated in U.S. dollars. Our operating expenses are denominated in the currencies of the countries in which our operations are located, which are primarily in the United States, the United Kingdom, and Mexico. Our condensed consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign currency exchange rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments, although we may choose to do so in the future. We do not believe that a hypothetical 10% increase or decrease in the relative value of the U.S. dollar to other currencies during any of the periods presented would have had a material impact on our condensed consolidated financial statements. For all international customer contracts denominated in currencies other than the U.S. dollar, certain of our operating metrics, including ARR, are translated from local currency to U.S. dollar based on the currency exchange rate as of the effective date of the contract.

Inflation Risk

We do not believe that inflation has had a material impact on our condensed consolidated financial statements. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could have a material impact on our condensed consolidated financial statements.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation and supervision of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on that evaluation, our principal executive officer and principal financial officer have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are designed to, and are effective to, provide reasonable assurance that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that there has not been any material change in our internal control over financial reporting during the fiscal quarter ended November 1, 2025 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Disclosure Controls and Procedures and Internal Control Over Financial Reporting

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of an error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a control system, misstatements due to error or fraud may occur and may not be detected.

Our business, operations, and financial condition are subject to various risks and uncertainties that could materially adversely affect our business, results of operations, financial condition, growth prospects, and the trading price of our Class A common stock. You should carefully consider the risks and uncertainties described under the section “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended February 1, 2025 and “Part II, Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the fiscal quarter ended May 3, 2025, which remain applicable to our business, together with all of the other information contained in this Quarterly Report on Form 10-Q, including the sections titled “Special Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. These factors, among others not currently known by us or that we currently do not believe are material, could cause our actual results to differ materially from historical results and those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors, and oral and other statements.