Samsara Inc.: Form 10-Q for the period ended Aug 1, 2026

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 January 31, 2026 included in our Annual Report on Form 10-K filed with the SEC on March 16, 2026, 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 the section titled “Risk Factors” included under Part I, Item 1A. of our Annual Report on Form 10-K filed with the SEC on March 16, 2026, 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. Unless otherwise indicated, these statements, like all statements in this Quarterly Report on Form 10-Q, speak only as of their date, 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 2027 and 2026 each consist of 52 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, assets, 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. Powered by our massive and growing data asset and expansive artificial intelligence (“AI”) technology, our differentiated, purpose-built suite of Applications and Agents 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 August 1, 2026 and August 2, 2025, our revenue was $508.4 million and $391.5 million, respectively. Our net income was $16.2 million for the three months ended August 1, 2026 and our net loss was $16.8 million for the three months ended August 2, 2025. For the six months ended August 1, 2026 and August 2, 2025, our revenue was $987.3 million and $758.4 million, respectively. Our net income was $60.8 million for the six months ended August 1, 2026 and our net loss was $38.9 million for the six months ended August 2, 2025. 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 presents a summary of our key business metrics as of the periods presented (dollars in thousands):

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.

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 our international presence.

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 Agents and expanding existing Applications and Agents 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 and Agents 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, 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 elevated hardware component costs, memory, storage and computing costs, 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 and geopolitical tension, 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 “Risk Factors” in Part II, Item 1A and elsewhere in this Quarterly Report on Form 10-Q and the section titled “Risk Factors” in Part I, Item 1A and elsewhere in our Annual Report on Form 10-K filed on March 16, 2026, 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 primarily 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, generally one or more wireless gateways, cameras, sensors and other devices (which we also refer to as connected devices or IoT devices), that are delivered over the term of the arrangement, and warranty coverage. 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 supply chain teams, including salaries, benefits, and stock-based compensation, amortization of internal-use software costs, fulfillment costs, warranty costs, provision for 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. Our cost of revenue may also increase as a result of higher market prices for hardware components. We intend to continue to invest additional resources in our Connected Operations Platform, including in our IoT device hardware, cloud infrastructure, and cellular connectivity, as well as in 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 current offerings and the development of new 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, and human resources, including salaries, benefits, and stock-based compensation. General and administrative expenses also include costs related to 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.

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, and net unrealized gains (losses) on our strategic investments. It also includes one-time gains and losses not associated with our core operations and 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 not more likely than not that the deferred tax assets will be realized.

Results of Operations

Comparison of the Three and Six Months Ended August 1, 2026 and August 2, 2025

Revenue

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

Revenue increased by $117.0 million and $228.9 million, or 30%, for the three and six months ended August 1, 2026, respectively, compared to the three and six months ended August 2, 2025, primarily due to growth in new customers and increased purchases 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 $25.4 million, or 28%, for the three months ended August 1, 2026 compared to the three months ended August 2, 2025, primarily due to $11.7 million of increased cloud and cellular costs, $6.4 million of increased connected device costs, and $3.3 million of increased employee-related costs. The increases in cloud and cellular costs and connected device costs were primarily due to increased sales volume and additional product features and functionality year-over-year. The increase in employee-related costs was primarily due to increased headcount.

Our gross margin remained flat at 77% for the three months ended August 1, 2026 compared to the three months ended August 2, 2025.

Cost of revenue increased by $59.9 million, or 34%, for the six months ended August 1, 2026 compared to the six months ended August 2, 2025, primarily due to $27.8 million of increased cloud and cellular costs, $17.1 million of increased connected device costs, and $6.3 million of increased employee-related costs. The increases in cloud and cellular costs and connected device costs were primarily due to increased sales volume and additional product features and functionality year-over-year. The increase in employee-related costs was primarily due to increased headcount.

Our gross margin decreased to 76% for the six months ended August 1, 2026 compared to 77% for the six months ended August 2, 2025, primarily due to increased cloud and cellular costs.

Research and Development

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

Research and development expense increased by $16.9 million, or 20%, for the three months ended August 1, 2026 compared to the three months ended August 2, 2025, primarily due to a $6.8 million increase in costs associated with software subscriptions, a $6.4 million increase in stock-based compensation expense, and a $6.2 million increase in platform costs driven by investments in AI tooling and related development infrastructure.

Research and development expense increased by $31.3 million, or 19%, for the six months ended August 1, 2026 compared to the six months ended August 2, 2025, primarily due to a $12.8 million increase in costs associated with software subscriptions, a $10.8 million increase in platform costs driven by investments in AI tooling and related development infrastructure, and a $10.1 million increase in employee-related costs primarily due to higher stock-based compensation expense.

Sales and Marketing

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

Sales and marketing expense increased by $43.7 million, or 25%, for the three months ended August 1, 2026 compared to the three months ended August 2, 2025, primarily due to a $25.7 million increase in employee-related costs which included a $6.1 million increase in sales commissions and a $4.5 million increase in stock-based compensation expense primarily due to increased headcount. The increase in sales and marketing expense was also due to an $11.5 million increase in expenditures incurred to generate demand through various marketing channels and promotional events, including our annual customer and investor conference.

Sales and marketing expense increased by $81.9 million, or 24%, for the six months ended August 1, 2026 compared to the six months ended August 2, 2025, primarily due to a $49.2 million increase in employee-related costs which included an $11.8 million increase in sales commissions and a $4.1 million increase in stock-based compensation expense primarily due to increased headcount. The increase in sales and marketing expense was also due to a $21.2 million increase in expenditures incurred to generate demand through various marketing channels and promotional events.

General and Administrative

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

General and administrative expense for the three months ended August 1, 2026 compared to the three months ended August 2, 2025 remained relatively flat.

General and administrative expense decreased by $16.1 million, or 12%, for the six months ended August 1, 2026 compared to the six months ended August 2, 2025, primarily due to a $17.8 million decrease in professional services fees, driven primarily by lower legal fees.

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 $1.2 million, or 11%, for the three months ended August 1, 2026 compared to the three months ended August 2, 2025. This increase was primarily due to unrealized gains from strategic investments, partially offset by foreign currency losses.

Interest income and other income, net, increased by $30.2 million, or 125%, for the six months ended August 1, 2026 compared to the six months ended August 2, 2025. This increase was primarily due to a $30.3 million arbitration award issued in Samsara’s favor in the Motive breach of contract, fraud, unfair competition, and false advertising matter.

Provision for Income Taxes

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

The provision for income taxes for the three months ended August 1, 2026 compared to the three months ended August 2, 2025 remained relatively flat.

The provision for income taxes increased by $2.5 million, or 79%, for the six months ended August 1, 2026 compared to the six months ended August 2, 2025, due to growth in 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 internal-use 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 cash expenses, 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.

In periods when they occur, significant lease modification, impairment and related charges, and legal settlements and awards 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 August 1, 2026 and August 2, 2025, respectively.

Non-GAAP Operating Income and Non-GAAP Operating Margin

We define non-GAAP operating income as income (loss) from operations excluding the effect of stock-based compensation expense-related charges, lease modification, impairment and related charges, and legal settlements and awards, in periods when they occur. Non-GAAP operating margin is defined as non-GAAP operating income as a percentage of total revenue. We use non-GAAP operating income and non-GAAP operating margin in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that non-GAAP operating income 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 income (loss) from operations for the periods presented (in thousands, except percentages):

(1) Stock-based compensation expense-related charges included amortization of capitalized stock-based compensation expense of approximately $1.5 million and $0.8 million for the three months ended August 1, 2026 and August 2, 2025, respectively, which was initially capitalized as internal-use software or cloud computing arrangements. Stock-based compensation expense-related charges also included approximately $3.3 million and $4.4 million of employer taxes on employee equity transactions for the three months ended August 1, 2026 and August 2, 2025, respectively.

Non-GAAP Net Income

We define non-GAAP net income as net income (loss) excluding the effect of stock-based compensation expense-related charges, lease modification, impairment and related charges, and legal settlements and awards, in periods when they occur. We use non-GAAP net income in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that non-GAAP net income 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 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 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 $1,558.4 million as of August 1, 2026. 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 August 1, 2026, our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments of $1,325.7 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, agency, and municipal 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 presents 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, third-party cloud and cellular costs, sales and marketing expenses, general and administrative costs, and purchases of inventory and connected device costs. We have supplemented working capital through net proceeds from the sale of equity securities.

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

Cash provided by operating activities was $154.9 million for the six months ended August 1, 2026. This consisted of net income of $60.8 million, adjusted for non-cash charges of $188.3 million, partially offset by $94.1 million of cash used by changes in our operating assets and liabilities. The non-cash charges were primarily composed of stock-based compensation expense of $173.9 million and depreciation and amortization of $16.3 million. Changes in our operating assets and liabilities during the six months ended August 1, 2026 reflect higher connected device costs (offset by a one-time $12.4 million cash refund related to tariffs), deferred commissions, and accounts receivable from customers due to the growth of our business; the recognition of an arbitration award receivable; and increases in inventory levels to meet anticipated demand. These increases were partially offset by increases in deferred revenue due to the growth of our business and lower vendor payments.

Cash provided by operating activities was $102.8 million for the six months ended August 2, 2025. This consisted of a net loss of $38.9 million, adjusted for non-cash charges of $162.7 million, partially offset by $21.0 million of cash used by changes in our operating assets and liabilities. The non-cash charges were primarily composed of stock-based compensation expense of $158.2 million and depreciation and amortization of $10.5 million, partially offset by net accretion of discounts on marketable debt securities of $5.0 million. Changes in our operating assets and liabilities during the six months ended August 2, 2025 reflect an increase in deferred commissions, connected device costs, and accounts receivable from customers due to the growth of our business; increases in vendor payments; and inventory levels to meet anticipated demand. These increases were partially offset by increases in deferred revenue due to the growth of our business.

Investing Activities

Cash used in investing activities was $129.5 million for the six months ended August 1, 2026, which primarily consisted of $578.5 million of purchases of investments and $12.2 million of capitalized internal-use software costs, partially offset by $465.9 million of proceeds from maturities and redemptions of investments.

Cash used in investing activities was $86.4 million for the six months ended August 2, 2025, which primarily consisted of $421.9 million of purchases of investments and $10.3 million of capitalized internal-use software costs, partially offset by $348.6 million of proceeds from maturities and redemptions of investments.

Financing Activities

Cash used in financing activities was $53.4 million for the six months ended August 1, 2026, which primarily consisted of $70.4 million of tax payments to net share settle equity awards, partially offset by $17.1 million of proceeds from employee stock purchases under the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) and exercises of stock options.

Cash provided by financing activities was $18.0 million for the six months ended August 2, 2025, which primarily consisted of $18.7 million of proceeds from employee stock purchases under the 2021 ESPP and exercises of stock options.

Contractual Obligations and Commitments

Our estimated future obligations consist of leases and non-cancelable purchase commitments as of August 1, 2026. 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 six months ended August 1, 2026.

Recent Accounting Pronouncements

For information on recently issued accounting pronouncements, refer to 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 August 1, 2026, we had $1,325.7 million of cash, cash equivalents, and short-term and long-term investments in a variety of marketable debt securities, including U.S. government, agency, and municipal securities, corporate notes and bonds, and commercial paper. 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 $8.9 million or an increase of $8.9 million in the market value of our cash equivalents and short-term and long-term investments as of August 1, 2026.

As of January 31, 2026, we had $1,236.9 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 of $7.3 million or an increase of $7.2 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 August 1, 2026 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. The following 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. You should carefully consider the following updated risks and uncertainties, together with all the other information contained in this Quarterly Report on Form 10-Q, as well as the risk factors discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, and “Part II, Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the fiscal quarter ended May 2, 2026, which remain applicable to our business.

Our dependence on a limited number of joint design manufacturers and suppliers of manufacturing services and critical components within our supply chain for our IoT devices may adversely affect our ability to sell subscriptions to our Connected Operations Platform, our margins, and our results of operations.

Our IoT devices are made using a primarily outsourced manufacturing business model that utilizes joint design manufacturers. We depend on a limited number of joint design manufacturers and suppliers, and in some instances, a single joint design manufacturer or supplier, to allocate sufficient capacity to meet our needs, to produce IoT devices, or components and materials thereof, of acceptable quality at acceptable yields, and to deliver those devices or components to us on a timely basis. We are subject to the risk of shortages and long lead times in the supply of these devices, components, and materials. In addition, the lead times associated with certain components are lengthy and preclude rapid changes in quantities and delivery schedules. We have in the past experienced and may in the future experience component shortages, and the availability of these components may be unpredictable. For example, previous global silicon component shortages have resulted in increased costs and delayed shipments across many industries, including for components used in our IoT devices. Additionally, demand for memory and storage components driven by investment in artificial intelligence infrastructure has caused leading memory suppliers to reallocate manufacturing capacity away from the categories of dynamic random-access memory and NAND flash memory used in devices such as ours. This has resulted, and may continue to further result, in increases in the prices of these components, extended lead times, allocation-based ordering, and end-of-life notices for certain component types. Because we design our IoT devices around specific components, we may be unable to substitute alternative components without undertaking hardware or firmware redesign, requalification, or recertification, any of which could be costly and delay shipments. Global transportation and freight networks have been strained as a result of global health crises, geopolitical conflicts, labor disputes, and other factors, which cause freight shipping costs and lead times to increase. Increases in the cost of devices or components, or freight to transport those items, could negatively impact our results of operations.

Our manufacturers and suppliers will continue to face the risk of temporary or permanent disruptions in their manufacturing operations due to component or material shortages, cost increases (such as increases in the cost of memory, storage, resins and computing), equipment breakdowns, labor strikes or shortages, natural disasters, disease outbreaks and resulting lockdowns, energy crises and power outages, geopolitical tension, civil unrest, hostilities or wars, trade policies, tariffs, acquisitions, insolvency, changes in legal or regulatory requirements, or other similar problems. Our manufacturers, suppliers, and sub-tier suppliers have a large presence in China and Taiwan. Any increase in tensions between China and Taiwan, including threats of military actions or escalation of military activities, could adversely affect our suppliers’ and joint design manufacturers’ operations in Taiwan and secondary locations in Asia. Although we have extended our supply orders to the latest quoted lead times, qualified additional components, and have in the past made preemptive spot purchases to build out our inventory, we cannot guarantee that we will have sufficient inventory for our needs or that future disruptions to our supply of IoT devices or materials will not occur. Any delay in the shipment of IoT devices or any other necessary materials delays our ability to recognize revenue for subscriptions purchased by our customers.

In addition, some of our suppliers, joint design manufacturers, and logistics providers may have more established relationships with larger-volume device manufacturers, and as a result of such relationships, such suppliers may choose to limit or terminate their relationship with us. Developing suitable alternate sources of supply for these devices and components may be time-consuming, difficult, and costly, and we may not be able to source these devices and components on terms that are favorable to us, or at all, which may adversely affect our ability to meet our requirements or provide our customers with needed IoT devices in a timely or cost-effective manner. Because our customers often must install IoT devices before being able to fully utilize our Connected Operations Platform, any interruption or delay in the supply of any of these devices or components, or the inability to obtain these devices or components from alternate sources at acceptable prices and within a reasonable amount of time, would harm our ability to onboard new customers.

Evolving trade policies, including the imposition of tariffs and other trade barriers by the United States and other countries, and increased trade enforcement globally, can have the effect of increasing production costs and creating disruptions and delays in supply chains. We expect that the occurrence of these developments in regions where we operate, such as North America and Europe, would likely increase the cost of our devices, disrupt supply chain logistics, and affect our ability to efficiently transport, store, and deliver our IoT devices to customers, which could negatively impact our revenue growth and operating margins. Our efforts to optimize our supply chain and manufacturing practices in light of evolving trade policies, component, production, and transportation costs, and other factors can be expensive, time-consuming, ineffective, and disruptive to our business and results of operations and may not succeed.

Abuse or misuse of our internal platform controls and system tools, or unintended or unauthorized actions by AI agents using such tools, could cause significant harm to our business and reputation.

In order to provide real-time support to our customers and improve and develop our products, we have created internal platform and system tools that are used by our employees to access data and systems. We may also use AI, including autonomous or agentic AI systems, in connection with our internal operations, software development, security, customer support, or other activities, and such systems may be permitted to access data, execute code, use internal tools, interact with other systems, or take actions on our behalf. If our employees were to intentionally or negligently abuse or misuse these tools, for example, by interfering with or altering our IoT devices or our customers’ connected assets, accessing our customers’ data, or otherwise violating company policies, our customers could be significantly harmed. Similarly, AI agents could take unintended or unauthorized actions, act outside the scope of their instructions or permissions, or exploit vulnerabilities or weaknesses in the systems or environments in which they operate. For example, AI agents with access to software development, computing, network, or other system resources may be capable of circumventing or escaping technical restrictions or isolated execution environments, including containers or other sandboxing mechanisms; obtaining access to networks or systems that were not intended to be accessible; escalating privileges; accessing, modifying, or disclosing confidential information; or using available tools and credentials to take additional unauthorized actions. Such actions may occur autonomously, at significant scale or speed, and in ways that are difficult for us to predict, detect, prevent, or terminate. Our technical safeguards, access controls, monitoring, isolation mechanisms, and other measures designed to constrain the actions of AI systems may not operate as intended or may be insufficient to prevent such behavior.

Our employees have historically had broad access to customers’ video footage and other customer data, and although we have implemented access controls, such controls may not ensure that access to and use of customer data by our employees or AI-enabled systems is in all cases appropriate. Additionally, some of our Applications have features allowing them to control large industrial assets or interact with some operations of vehicles. Any abuse or misuse of these capabilities, or unintended or unauthorized actions by an AI agent with access to systems capable of exercising such functionality, could cause substantial disruption or damage to our customers, including potentially affecting their physical operations or assets.

Any abuse or misuse by our employees of our internal platform and system tools, or any unintended or unauthorized actions taken by AI agents or other automated systems using such tools, could result in unauthorized access to or disclosure, modification, or destruction of data; disruption or compromise of our systems or those of our customers, partners, or other third parties; damage to physical assets or operations; potential legal or regulatory liability; and reputational harm to our customers, our partners, and us. Accordingly, any improper conduct, abuse or misuse, intentional or otherwise, of our platform and system tools, or any failure to appropriately constrain AI agents or other automated systems that interact with them, could significantly and adversely harm our business and reputation.

We are continuing to implement enhanced access controls and other safeguards for our platform controls and system tools in an effort to further improve security and reduce the risks of human error, malfeasance, and unintended or unauthorized actions by AI agents and other automated systems. These safeguards may include restrictions on access, privileges, network connectivity, execution environments, and tool use, as well as monitoring and other controls designed to detect or limit unauthorized activity. Such measures may not be sufficient to prevent all unintended or unauthorized actions. If it becomes necessary to further restrict the availability, capabilities, or use of our platform and system tools by our employees or AI systems in response to these risks, our ability to develop products, operate efficiently, or deliver high-quality and timely customer support could be harmed.

We rely on third-party software and technology providers for certain essential financial and operational services, and a failure or disruption in, or a material change to, these services could materially and adversely affect our ability to manage our business effectively.

We rely on third-party software and technology providers to provide many essential financial and operational services to support our business, including enterprise resource planning, customer relationship management, artificial intelligence technologies and models, and human capital management. Many of these vendors provide their services to us through cloud-based platforms, APIs, or other hosted services rather than software that is installed and operated on our premises. As a result, we depend on these vendors to provide services that are reliable, secure, available, and compatible with our systems and business requirements.

Our use of third-party AI technologies and models may create additional dependencies on providers whose technologies, infrastructure, security practices, and commercial terms we do not control. Such providers often modify or discontinue models or services, change their functionality or performance, impose or modify usage restrictions or rate limits, increase pricing, experience capacity constraints or service disruptions, or change the terms under which their technologies may be used. Updates to third-party AI models or services may also result in unexpected changes in their performance, behavior, security, or compatibility with our systems. Because we generally do not control the underlying models or infrastructure provided by these third parties, our ability to identify, correct, or mitigate defects, vulnerabilities, outages, or other problems may be limited or dependent upon the provider.

If a third-party technology or AI model on which we rely becomes unavailable, materially changes, no longer meets our security, privacy, performance, legal, or business requirements, or becomes uneconomical to use, we may need to identify and transition to an alternative provider or technology. Such a transition may require significant engineering, testing, operational, or other resources, may not be completed on a timely basis, and may result in disruptions to our operations or the functionality or performance of systems that depend on such technologies.

Any failure, security incident, service disruption, material change, or other deficiency involving these vendors or technologies, or any disruption in our ability to access them, could disrupt our business processes, increase our costs, require us to modify our systems or business practices, and materially and adversely affect our ability to effectively manage our business.

Issues and uncertainty in the development, deployment, and use of AI in our solution, in our business, and by our customers or partners may subject us to liability and may harm our reputation and operating results.

We are investing significantly in leveraging AI technologies, including generative AI and AI agents, within our solutions and operations. We are increasingly innovating and expanding offerings on our Connected Operations Platform by integrating AI into our technology and systems. We are also developing and incorporating AI solutions and features into our operations to help drive future growth and efficiency. As with many developing technologies, AI presents risks and challenges that could affect its further development, adoption, and use, and therefore our business. AI algorithms may be flawed. Datasets may be insufficient or of poor quality or contain biased information. Inappropriate or controversial data practices by third parties, data scientists, engineers, and end users of our systems could impair the acceptance of AI solutions. If the recommendations, forecasts, content, or analyses that AI applications assist in producing are or are alleged to be deficient or inaccurate, we could be subjected to competitive harm, potential legal liability, and brand or reputational harm. Our, or our vendors’, use of AI technologies could lead to the unauthorized disclosure of sensitive, proprietary, or confidential information and could lead to new potential cyberattack methods for third parties or be used to increase the frequency, sophistication or intensity of cyberattacks. The impact of AI technology on intellectual property ownership and licensing rights, including copyright, has not been fully addressed by relevant courts or other laws or regulations, and the use of third-party AI technologies in connection with our solution and operations may result in exposure to claims of copyright infringement or other intellectual property misappropriation, or a reduced ability to protect our intellectual property. We may choose to invest in the development and maintenance of proprietary data sets and training models and the development of appropriate protections, safeguards, and policies for handling the processing of data, including transparency of customer data extraction and usage in training models, with our AI features, which may be costly and subject us to legal liability. Increasing use of AI tools, including large language model APIs and related infrastructure, exposes us to growing costs. Token-based and consumption-based pricing models mean that as our use of AI in our solution increases, or as employee adoption scales and use cases expand, our margins may be impacted and our AI-related operating expenses could increase materially. There can be no assurance that we will realize the desired or anticipated benefits from our investments in AI technology in a timely or cost-effective manner.

Some AI scenarios may also present ethical issues. If we enable or offer AI features that are controversial because of their perceived or real impact on human rights, privacy, data protection, employment, or other social issues, we may experience brand or reputational harm.

Additionally, jurisdictions around the world are developing and passing new regulations that apply specifically to the use of AI. Government regulation related to AI use and ethics may expose us to legal liability and/or increase the burden and cost of research and development in this area, and failure to properly remediate AI usage or ethics issues may cause public confidence in AI to be undermined, which could slow adoption of AI in our solution. For example, the European Union Artificial Intelligence Act (“EU AI Act”) imposes a series of legal and technical obligations and restrictions on companies’ use, and development of, AI with varying enforcement dates. Under the EU AI Act, fines can reach up to the greater of €35 million and 7% of global annual turnover. Other countries, including the United States, have begun considering and implementing AI regulations. For example, the Federal Trade Commission (“FTC”) adopted streamlined procedures for AI-related investigations in November 2023; and several bills involving AI have been introduced in Congress. Several states have also passed legislation or regulatory frameworks governing automated decision-making and agentic systems, which may impose heightened compliance obligations and operational restrictions on our development and deployment of AI features.

In addition, our competitors, customers, or other third parties may incorporate AI more successfully than us, and their AI solutions may achieve higher market acceptance than ours, which may result in decreased demand for our solution and us failing to recoup our investments in developing AI-powered offerings. Uncertainty around new and emerging AI technologies may require significant additional investment in these technologies. Any challenges in deploying our AI-based technologies, or the ability of our competitors to do so more effectively, may impair our ability to compete effectively, result in reputational harm, and have an adverse impact on our operating results.

If we are not able to maintain, enhance, and protect our brand, our business, financial condition, and results of operations may be harmed.

We believe that maintaining, enhancing, and protecting our reputation as a differentiated and category-defining company is critical to our relationships with our existing customers and to our ability to attract new customers. We also believe the importance of brand recognition will increase as competition in our market increases, and that brand and reputation are particularly important in the physical operations industry given the potential impact of any failure of our solution on the physical operations of our customers. In the second quarter of fiscal year 2027, we updated our brand identity, including changes to our logo, typeface, color palette, and other visual elements. Implementing this updated brand identity has required and may require further expenditures and may not achieve its intended benefits, and it could result in customer confusion or otherwise adversely affect our brand recognition or reputation. The successful promotion and protection of our updated brand depends on a number of factors, including our and our channel partners’ marketing efforts and conduct in the marketplace, our ability to continue to develop high-quality solutions, our ability to successfully differentiate our Applications from those of competitors, and our ability to obtain and maintain intellectual property and other protections related to our brand. In addition, users of our solution, independent industry analysts, and other media commentators, and participants in online forums, social media platforms, and other digital channels, provide reviews of our solution and our competitors’ products, which could influence the perception of the relative value of our solution in the marketplace. If these reviews are negative, or less positive as compared to those of our competitors’ products, our reputation and brand may be harmed.

The promotion of our brand requires us to make substantial expenditures, and we anticipate the expenditures will increase as our market becomes more competitive, as we expand into new markets, and as more sales are generated through our channel partners. Our brand promotion activities may not generate customer awareness or yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand. If we do not successfully maintain and enhance our brand, our business may not grow, we may have reduced pricing power relative to competitors, and we could lose customers or fail to attract potential customers, any of which would harm our business, financial condition, and results of operations.