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Operator: Thank you for standing by. Welcome to the Sportsman's Warehouse Holdings, Inc. third quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Riley Timmer, investor relations. Please go ahead, sir. Riley Timmer: Thank you, operator. Participating on our Q3 call today is Paul Stone, our Chief Executive Officer, and Jennifer Fall Jung, our Chief Financial Officer. I'll now take a moment and remind everyone of the company's safe harbor. The statements we make today contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which includes statements regarding expectations about our future results of operations, demand for our products, and growth of our industry. Actual results may differ materially from those suggested in such statements due to a number of risks and uncertainties, including those described in the company's most recent Form 10-K and the company's other filings made with the SEC. We will also disclose non-GAAP financial measures during today's call. Definitions of such non-GAAP measures, as well as reconciliations to the most directly comparable GAAP financial measures, are provided as supplemental financial information in our press release included as Exhibit 99.1 to the Form 8-K we furnished with the SEC today, which is also available on the Investor Relations section of our website at sportsmans.com. I will now turn the call over to Paul. Paul Stone: Thank you, Riley, and good afternoon, everyone. Before we begin, I want to recognize our team of dedicated outfitters across the country. Each day, they deliver on our promise of great gear and exceptional service, and their commitment continues to help drive our momentum. Turning now to our third quarter results. I'm encouraged by the solid progress our team continues to make as we execute against our transformation strategy. Despite a tough consumer environment and the impact of a prolonged government shutdown, we delivered our third consecutive quarter of positive same-store sales growth. Same-store sales grew 2.2% versus last year, with broad-based strength in our core categories of hunting and shooting sports as well as fishing. Our firearms business once again outperformed adjusted NIC checks, extending our market share gains for yet another quarter. While adjusting mix checks declined, our farm unit sales increased, despite the election-driven headwinds from Q3 last year, underscoring the continued focus and improvements on a curated assortment with depth in key products, strong in-stocks, and seasonal readiness with inventory, our enhanced marketing efforts, and our Outfitter-led in-store experience. In ammunition, sales demand remained strong, growing nearly 2% in Q3. Our EDLP strategy on core calibers, complemented by healthier in-stocks and bulk ammo strategy, continues to resonate with customers. With average unit retail up in the low single digits, we are seeing sustained engagement from customers as we lean in further to drive the areas of our business. Looking now at our key categories. We drove meaningful growth across several strategically important departments. Hunting and shooting sports increased 5%, supported by strong inventory levels with relevant local assortments heading into our peak fall season. Fishing delivered exceptional growth of 14%, reflecting broad participation in the category and strong execution from our teams. Apparel grew about 1% with particular strength in technical outdoor wear that supports our solution selling approach. Camping, however, remained challenged. Sales declined versus last year, reflecting the highly discretionary nature of this category. This is a category where we continue to refine and curate this assortment to complement the pursuits that drive customers into our stores. In fact, inventory in this category was down more than sales, highlighting greater efficiency with our inventory and investments in our key sales and traffic-driving categories. E-commerce was another bright spot, delivering growth of 8% in the quarter. Both ship-to-home and buy online pickup in-store performed well, with BOPUS continuing to drive traffic and improve conversion in our stores. Our digital-first marketing efforts are supporting higher engagement and customer acquisition across all channels. The improvements we're seeing across the business remain tied to the strategic priorities guiding our transformation. Inventory precision. We meaningfully reduced inventory from Q2 to Q3 while supporting peak seasonal demand, demonstrating improved planning, forecasting, and allocation disciplines. Importantly, we paid down debt during the quarter and remain on track to finish the year with lower total inventory than last year and positive free cash flow. Our focus on fast-returning, regionally relevant assortments continues to drive both margin and working capital efficiency. Local relevance. Aligning our merchandise and marketing to local outdoor pursuits continues to drive measurable results. We are expanding targeted marketing, community partnerships, and in-store educational events that reinforce our position as the local authority for outdoor enthusiasts. Jennifer Fall Jung: Personal protection. Paul Stone: This category continued to resonate strongly with customers, with strength across both lethal and non-lethal solutions. Burn and taser remain strong growth drivers, and the try-before-you-buy model in our archery lanes and enclosed pod is differentiating our store experience in meaningful ways. We added burn in additional stores during Q3 and now have live demos available in 116 of our 147 stores across the country. We are committed to building on this momentum as we further position Sportsman's Warehouse Holdings, Inc. as the authority in personal protection. Brand awareness. Q3 marked an important milestone in our brand awareness journey. Our Adventure Like a Local campaign and digital-first go-to-market strategy has proven to resonate with customers as we noted highest year-to-date engagement, deepened our loyalty subscribers, and strengthened brand affinity. Using our new first-party data insights, this now gives us the foundation to strengthen retention and value through the transformation of our Explore rewards program. Focused on increasing AOV, transactions per customer, and long-term customer value. Q4 will be dedicated to road mapping an enterprise-level 2026 customer acquisition strategy that reduces reliance on promotion and shifts the business towards more sustainable profitable growth. In early November, we were pleased to open our newest store in Surprise, Arizona. Our eleventh location in the state. Arizona is a market we know very well, with several of our top-performing stores already operating in the region. This new location features a unique personal protection-focused format, the first of its kind in our fleet, designed to meet the needs of the customer seeking both lethal and non-lethal solutions. This will be our only planned store opening for both 2025 and 2026, reflecting our disciplined approach to growth and our commitment to investing where we see the greatest opportunity for long-term returns. I'll now provide a little color on the current market conditions creating headwinds on the business. Starting in mid-October, we started to see a slowdown in our positive sales trend, which we believe was partially driven by external disruptions from a prolonged government shutdown impacting consumer confidence. This has made for a challenging start to Q4, and while still early in the quarter, we believe it's prudent to take a conservative approach to the balance of the year. With the U.S. consumer under pressure and a very promotional retail landscape, we are navigating the environment carefully and maintaining disciplined control over variable costs and inventory productivity. Given these dynamics, we are taking a cautious view of the fourth quarter. So we remain confident that our strategic priorities and ability to adjust with speed will support modest sales growth for the full year. We remain confident in our ability to finish the year with lower inventory than last year, generate positive free cash flow, and a lower debt balance. Now, I will turn the call over to Jennifer. Jennifer Fall Jung: Thank you, Paul, and good afternoon, everyone. We delivered our third consecutive quarter of same-store sales growth in Q3, with comps up 2.2% year over year, maintaining our positive trend from the second quarter. Net sales for the quarter were $331.3 million, an increase of 2.2% compared to the prior year. We are pleased to report that the company achieved three consecutive quarters of year-over-year comp store sales growth. This has been the result of a focused strategy to win the seasons in hunting and fishing and our conviction to lean in heavily to the personal protection category, an area where others in the industry are backing away. Reflective of this focus is the 5.3% growth we achieved in Q3 in our Hunting and Shooting Sports department and the 14.1% increase in fishing, which on a two-year comp stack is up 17.9%. Additionally, apparel was up 1.4% in the quarter. The combination of this growth was partially offset by decreases in our other departments. Gross margin for the quarter was 32.8%, a 100 basis point improvement versus Q3 last year. This increase was largely driven by improved overall product margins from healthier inventory, lower freight expense due to lower inventory receipts, improved shrink, and a higher penetration of sales from our fishing department, which has a higher overall gross margin. This increase was partially offset by an outsized mix shift to firearms and ammo, which has lower gross margin and a lower penetration in the camping and footwear departments, which carry higher margin rates. SG&A expenses were $104.5 million or 31.5% of net sales, versus 30.8% in the prior year. This increase was driven by a reinvestment in our customer-facing areas of the business, including store and support area labor, and digital marketing to drive sales and omnichannel traffic. Additionally, SG&A was pressured this quarter from about $3 million of additional nonrecurring add-back expenses. Excluding add-back expenses in both years, SG&A as a percent of sales was 30.3% versus 30.1%. We will continue to closely manage our variable operating expenses. Net income improved to $8,000 or $0.00 per diluted share versus negative $0.01 per diluted share in the third quarter of last year. Adjusted net income in the third quarter was $3 million or $0.08 per diluted share compared with adjusted net income of $1.4 million or $0.04 per diluted share in the third quarter of last year. Adjusted EBITDA for the third quarter grew 13% to $18.6 million compared with adjusted EBITDA of $16.4 million in the third quarter of last year, an improvement of 50 basis points as a percentage of net sales. Now turning to inventory. Total inventory at the end of Q3 was $424 million compared to $438.1 million in the same period last year, a decrease of $14.1 million or 3.2%. As anticipated, we also reduced inventory by approximately $20 million compared with Q2. We strategically pulled inventory forward in the first half of the year and into early Q3. This was in an effort to ensure our stores were well prepared and set on time for the fall hunting and fishing season and to be ready and on time to support the holiday selling season. Our focus remains to build depth in core items and eliminate the slow-moving inventory that doesn't resonate with the customer. It's critical that our inventory is seasonally and regionally relevant, faster churning, and supported by predictable customer demand, which will produce lower inventory balances. This will continue to be a focused effort for 2026 and provide efficiency in our operating model. Through enhanced buying discipline, our goal is to be in season earlier, exit earlier, and achieve clean sell-throughs across the categories, which will improve the return on our working capital. Given the improvements in working capital efficiency, we expect to end the year with ending inventory less than $330 million, which is $12 million less than prior year on a higher base of sales. In regards to liquidity, during the quarter, we paid down $13.2 million of debt and ended the quarter with a total debt balance of $181.9 million and total liquidity of $111.9 million. Additionally, in November, we drew inventory down by $23 million and paid down an additional $9 million in debt. As we move through the holiday selling season and end of the year, we expect to end the year both free cash flow positive and total debt to be lower than our ending balance last year. Inventory efficiency and tight control of variable expenses remain top priorities as we manage the business prudently through Q4 and into 2026. Finally, let me speak to our update on full-year guidance. Starting late in the third quarter and now into Q4, we are seeing accelerated macroeconomic headwinds from a pressured U.S. consumer and what we believe are the prolonged effects of a government shutdown. Given this pressure, we have increased our promotional efforts to maintain inventory efficiency while driving sales, which is putting pressures on margins. Additionally, we have increased our digital marketing spend to be more competitive in the marketplace to accelerate omnichannel traffic during this period of high shopper demand. Accordingly, as we recognize and navigate current market conditions, we are revising our full-year guidance. For the full fiscal year 2025, we are adjusting our net sales range to be flat to up slightly. Again, this adjustment reflects a tough Q4 environment due to a challenged U.S. consumer. Furthermore, we are adjusting our full-year EBITDA guidance due to margin pressure from the very promotional Q4 and lower than anticipated Q4 sales. We now expect adjusted EBITDA to be in the range of $22 million to $26 million. As mentioned earlier, we expect ending inventory to be less than $330 million, and we expect our capital expenditures to be less than $25 million for the full year. As we move forward into 2026, we anticipate continued progress around our strategic initiatives, with very modest top-line growth and a focus on improved profitability through disciplined cost management, inventory efficiency, and improved gross margins. I will now turn the call back to the operator to facilitate any questions. Operator: Certainly. And as a reminder, ladies and gentlemen, if you have a question at this time, please press 11 on your telephone. Our first question comes from the line of Ryan Sigdahl from Craig Hallum Capital. Your question, please. Ryan Sigdahl: Hey. Good afternoon. I want to start with what you're seeing in recent weeks, Black Friday, Cyber Monday, etcetera, and if you've seen any improvement. And then maybe separately to that, given the cut to the guidance, weak consumer, you mentioned government shutdown. Curious if those trends have been persistent or if you've seen any improvement now that the government shutdown is no longer. Jennifer Fall Jung: Great. Hey, Ryan. This is Jennifer. Thanks for the question. Yes, I think as we spoke about in our guidance, what we saw in the end of October where our trajectory turned more negative. We started to see that through November as well. We didn't necessarily see a pickup from right after the government shutdown. So that's really reflected in our guidance for the quarter. Ryan Sigdahl: Gotcha. Maybe just gross margin, help us out for Q4. I guess, how much of this is you guys gonna lean into promotions to try and bring customers in versus trying to more hold profitability and manage the margin side? Jennifer Fall Jung: Yes. It's a little bit of using the inventory we have to drive sales and to drive foot traffic into the store, but it's also inventory management. There's a seasonal component to our business, and we know that we need to exit this inventory when the customer is shopping for it. We don't want to carry aged inventory into 2026. So it's twofold. One, managing our inventory, managing our networking capital, and two, using it to help stimulate our sales. Ryan Sigdahl: Last one for me is just we have a Florida second amendment sales tax holiday. Curious if you guys saw any benefit to the business, and how you think that trends into the New Year as that goes away? Jennifer Fall Jung: Yeah. Not necessarily. That's not one of our larger markets, but no huge impact to us. Ryan Sigdahl: Thanks, Jennifer. Good luck, guys. Jennifer Fall Jung: Thank you. Operator: Thank you. And our next question comes from the line of Anna Glaessgen from B. Riley Securities. Your question, please. Anna Glaessgen: Hey. Good afternoon, guys. I'd like to touch on the marketing spend commentary in Q4, you know, understanding the headwinds that you're seeing from the consumer and the government shutdown impacting sentiment. I guess, what are your thoughts on elevating marketing when the consumer seems to be responding to more external headwinds and, you know, what are you expecting in terms of that marketing efficiency in the quarter? Jennifer Fall Jung: Hey, Anna. This is Jennifer. Thanks for the question. So the way we're really thinking about it is twofold. First off, you know, as we look across the competitive landscape, it is highly promotional and highly marketed out there. So it's really, you know, for us to be competitive in the marketplace, we feel we need to spend. We did go up against print last year in the month of November, which we did not have this year. We've turned more to digital marketing and email. But that's really what's been working for us. And so yeah, we have a lot of great deals out there right now, and we're just gonna start leaning in heavier into firearms and ammo. And so we need to tell our customer that's what they come to us for, so we need to communicate that to them. Anna Glaessgen: Got it. And then turning to CAMP, could you give us what the comp was in the quarter? And then bigger picture, I guess, what do you think needs to happen for that department to perform more consistently? Thanks. Jennifer Fall Jung: Thanks. Yeah. For CAMP, as you know, it was tough on camp. Q3 has been tough on camp. So we've been expecting that. That being said, their inventory trend is below their sales trend. On the quarter, they were down high single digits from a same-store sales perspective. But their inventory is down double digits. So we're managing it. We know we have an area of opportunity there and from an assortment standpoint. And so that's definitely what we'll be focused on right now and in 2026. Paul Stone: I think the other thing just on that end is that's one of the biggest categories we hit from a general way standpoint. As we were evaluating where to redeploy working capital dollars. So as we were pulling back on inventory at the same time to be able to reinvest back into fish and to hunt and shoot, that department took the biggest hit as far as being able to pull back on our inventory versus the other categories. Anna Glaessgen: Great. Thanks, guys. Take care. Operator: And our next question comes from the line of Mark Smith from Lake Street. Your question, please. Mark Smith: Hi, guys. First, I want to ask just about kind of the promotional environment, in particular around Black Friday. Jennifer, you just talked about how you guys didn't have print this year. It seems like and correct me if I'm wrong. That you weren't as promotional as we historically think about kind of doorbusters and print ads. Was this purposeful? And I'm curious your thoughts around kind of the impact on your outlook for Q4 purely around kind of Black Friday weekend? Jennifer Fall Jung: Yeah. Great question. Hey, Mark. Thanks for the question. For Black Friday, we're definitely promotional, but you called it out. We didn't necessarily go out with doorbusters like a lot of our competitors were. You know, right now, during the month of December, we're reimplementing some of those doorbusters. Because it's still a high traffic area. So that's where we were a little bit different. But if you looked across our box, we were very promotional. A lot of it was in-store signage. In terms of what our big deals were. And we kept a lot of them on for maybe a couple of weeks versus churning them constantly like some of our competitors were. So you know, we're writing that and changing our strategy in the month of December to go after what our customer wants and to continue to drive foot traffic to the stores. Paul Stone: And I think looking year to year promotion to promotion, much heavier this year on the total promotion. The doorbuster we'd look at that. We'll continue to look at that on what that means and what it means to the customer markets as we think about it. But as we look at it now and then we think we have some runway over the next few weeks to be able to light up promotions actually starting tomorrow to be able to help us in a different time frame, but at the same time, be able to be super aggressive promotionally to be able to drive traffic as needed. Mark Smith: Okay. And then as we think about kind of inventory by category, and I don't know how much you can share with us on this. You just talked about camping down kind of double digits. I'm curious as we think about and the inventory looks good, down sequentially, down year over year. But if there's certain categories where maybe you're a little heavier and as we see more promotions or marketing spend here over the next thirty plus days. You know, what should this be really heavy in kind of that hunt shoot category, or is it maybe more widespread as we think about inventory that you wanna move through here? Jennifer Fall Jung: Yeah. I'll start with the category perspective. So if you look at inventory by category, all of the categories that were down in the quarter, they actually have inventory that is more down. So they are doing a great job managing the inventory for those categories that weren't performing. The only two categories that were up were fish, which as we mentioned, was very successful in the quarter, and then slightly up in hunt. But not much. You know, I think it was, like, less than 2%. But, you know, as we look forward to the coming weeks, we are gonna be leaning on the hunt and shoot category to drive sales because, you know, that's what we know drives our customer to our store. It's a large portion of our sales, and we have the inventory to do so. So that's how we're gonna leverage that category. Paul Stone: I would just add, Mark. At this point, we're not worried about inventory. The team's done a great job all year where we do have it in fish, and we're running and continue to run strong performance in fish. And then firearms and ammo is in the best position it's been, and we feel good and have the opportunity, we think, here over the next seven weeks to be able to deploy more firearms and ammo from a promotional standpoint to be able to help drive that traffic. But as we look at inventory where we're at and where we're working, our glide path down, we feel very comfortable even given the current macros we're facing to put inventory in a good position. Mark Smith: Okay. And the last question for me, just, you know, personal protection. It seems like you're seeing some solid results there. I'm curious if you can share any thoughts around kind of the margin profile, as we think about burnout, taser, you know, lethal, nonlethal, if there's any real difference in that nonlethal personal protection margin profile versus maybe traditional carry firearms? Jennifer Fall Jung: Yeah. Personal protection has been great for us, and it is one of our strategic pillars. So you know, that'll be a theme you'll continue to hear on calls. From a margin perspective, it is accretive. The nonlethal is accretive to the category. You know? And right now, it's in at least Berna is in 117 stores. Taser not as many. But, you know, we'll continue to evaluate stores to put those in. But it's been a success, and we're glad to see it bring in a different customer base. I mean, we think that's one of the values of it. You know, you have a lot of customers coming in and buying it for other members of their family. Maybe their wife, maybe their daughters. I had a friend that bought four of them for his entire family. So, yeah, it's bringing in people that are just looking for something different that don't necessarily want something that's lethal. Mark Smith: Okay. Excellent. Jennifer Fall Jung: Thank you. Operator: Thank you. And our next question comes from the line of Matt Koranda from ROTH Capital. Your question, please. Joseph (for Matt Koranda): Hey, guys. This is Joseph on for Matt. Just kind of hop into your response on driving traffic for promotions in hunt and shoot. Is that the only lever that we have here to pull in terms of returning back to positive comps here? It looks like 3Q was down about 8%. Just anything else that we can pull to return back to those positive comps in hunt and shoot? Jennifer Fall Jung: Okay. Hey, Joseph. This is Jen. So our Q3 comp was a positive two. I'm not sure if I misunderstood your last comment. So we have been positive comping for three consecutive quarters. As we look forward into holiday, we're not leaning strictly on firearms ammo. That's more of a later on. I mean, holiday is a very promotional season anyway, so there'll be many promotions throughout the store. That's just something we are layering on that we didn't have as upfront in November or as in Q3. Paul Stone: Yeah. I think just to answer that, I mean, Hunt puts us for the queue as north of 5%. Hunt and shoot, as we define it, puts up over 5% for the queue. Clearly, that's the traffic drivers along with ammunition that helps to drive it, but also the attachment parts of the business too. Around optics and the different components and the total solution of the firearm piece of it. But the kind of the milk and bread is clearly firearms and ammunition to be able to drive people, and it really gives our operators the opportunity to be able to attach to increase the AOV and the UPT as well. So I think we'll use that. You've got ammo, like I said, we'll start seeing that tomorrow. Extremely aggressive. Prices on AMLO even our inventory is in great position, but it'll be a driver to be able to help us to attach increase the overall boxes, AOV, and UPT. Joseph (for Matt Koranda): Got it. And just if you guys could give us any preliminary thoughts on margin expansion, just going into fiscal twenty-six. I know this current tougher demand environment sustains. Can we still deliver any margin expansion in the next year? Jennifer Fall Jung: We haven't quite given guidance on 2026, but what we'll be focused on really is efficiency and profitable growth. We will continue to look at our inventory and make sure that we are getting as much margin accretion out of that as possible. But, yeah, we're really focused on 2026 on our profitable sales growth and managing inventory and margins. And continue to look at our cost structure. Joseph (for Matt Koranda): Got it. I'll leave it there. Thanks for answering my questions. Operator: Thanks. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Riley Timmer for any further remarks. Riley Timmer: Thank you for joining the call today, and thank you to all our passionate outfitters around the country for their commitment to Sportsman's Warehouse Holdings, Inc. Together, we look forward to providing our customers with great gear and exceptional service. Thank you all. Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Operator: Good afternoon, ladies and gentlemen, and welcome to the Rubrik Third Quarter Fiscal Year 2026 Results Conference Call. [Operator Instructions]. This call is being recorded on Thursday, December 4, 2025. I would now like to turn the conference over to Melissa Franchi, Head of Investor Relations. Please go ahead. Melissa Franchi: Hello, everyone. Welcome to Rubrik's Third Quarter Fiscal Year 2026 Financial Results Conference Call. On the call with me today are Bipul Sinha, CEO, Chairman and Co-Founder of Rubrik, and Kiran Choudary, Chief Financial Officer. Our earnings press release was issued today after the market closed and may be downloaded from the Investor Relations page at www.ir.rubrik.com. Also on this page, you'll be able to find a slide deck with financial highlights that, along with our earnings release includes a reconciliation of GAAP to non-GAAP financial results. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. During this call, we will make forward-looking statements, including statements regarding our financial outlook for the fourth quarter and full fiscal year 2026. Our expectations regarding market trends, our market position, opportunities, including with respect to generative AI, growth strategies, current initiatives and expectations regarding those initiatives and our go-to-market motions. These statements are only predictions that are based on what we believe today, and actual results may differ materially. These forward-looking statements are subject to risks and other factors that could affect our performance and financial results, which we discuss in detail in our filings with the SEC. Rubrik assumes no obligation to update any forward-looking statements we may make on today's call. With that, I'll hand the call over to Bipul. Bipul Sinha: Thank you, Melissa, and thank you all for joining us today. Let me start by saying our third quarter results were exceptional. Every quarter for the past several quarters, we have successfully delivered in many cases, record numbers. In fact, this quarter has been our best ever. We have not only added record net new subscription ARR, but also generated tremendous free cash flow. And I'm happy to report we once again exceeded all guided metrics across top line and profitability. Here are 5 key numbers. First, subscription ARR reached $1.35 billion, growing 34% year-over-year. Net new subscription ARR reached a record $94 million. Second, our subscription revenue was $336 million, growing 52% year-over-year. Third, our subscription NRR remained strong once again, over 120%. Fourth, customers with $100,000 or more in subscription ARR reached 2,638, growing 27% year-over-year. And finally, on profitability, we once again made material improvement in subscription ARR contribution margin, up about 1,400 basis points year-over-year. We generated a record $77 million in free cash flow this quarter. This combination of top line growth and cash flow margin at our scale is best in class. We remain confident about the opportunity ahead, and thus, we are again raising our outlook for the year. Bipul Sinha: But let me begin by providing some additional context on our market opportunity as well as our areas of focus. Our mission is to lead Rubrik into our next era as the, let me repeat, the security and AI operations company. My discussions with IT and security leaders consistently reveal an assume breach mentality, which means being prepared for the inevitable reality that every enterprise will face a successful cyber breach. This preparation includes 2 things: First, understanding the risk of a cyber breach in terms of both data content and identities. And second, the ability to remediate and recover from the breach to ensure business continuity. But the landscape in which these threats occur has dramatically evolved. Organizations are now facing a new cyber landscape with AI potentially enabling threat actors to inflict 10x more damage in 1/10 of the time. Alongside these challenges, enterprises are also focused on modernizing their infrastructure in anticipation of the impending enterprise AI transformation. While AI presents 100x more risk, the AI transformation promises 100x more opportunities, much like every big generational shift in enterprise technology. When cloud redefined IT, Rubrik ensured simple and reliable recovery. When cyber threat surged, we extended our Rubrik Security Cloud product suite across data and identity to deliver true cyber resilience. Now with the rise of AI agents, a new transformation is underway. AI transformation presents unique challenges. An agent operates within an organization's environment runs business processes, assumes identity, touches critical data and impacts mission-critical applications at unprecedented speed and scale. These agents are effectively superhuman, but organizations don't yet have the guardrails to monitor and contain what they do. We need to think about AI agents very differently. Through this AI transformation, Rubrik's mission and its strategy remains the same, to accelerate our customers' journey to AI enterprise. I will delve deeper into our AI agent innovations later in my remarks. Bipul Sinha: As companies shift deeper into cloud and AI, customers continue to turn to Rubrik for complete cyber resilience, which includes 2 key set of capabilities. First, consistent data and identity security policy controls, and second, rapid and accurate recovery from cyber attacks. While we believe we have a tremendous opportunity in enterprise AI acceleration, we continue to focus on and when the vast cyber resilience market, which includes our core data protection solutions and identity resilience. Let me provide some more details across our 3 businesses: data protection, identity resilience and AI operations. Our cyber resilient data protection journey remains in its early stages, particularly as data availability and security become the most crucial element for AI. We continue to add new solutions across data center, cloud and SaaS workloads, leveraging the same underlying preemptive recovery engine to deliver complete risk and remediation capabilities. Our unique architecture consistently enables us to outperform both legacy and new gen backup vendors. In fact, in the third quarter, bookings from legacy replacements accelerated year-on-year, surpassing the growth rates seen in the first half of the year. Let me provide 2 specific examples of legacy replacements in very large enterprises. First, one of the largest banks in Asia and worldwide selected Rubrik as the strategic cyber resilience partner, replacing a long-standing legacy vendor. We outcompeted several new gen backup vendors for this opportunity. Rubrik's platform now provides data protection across its data center and cloud workloads for mission-critical applications. The customer also chose the Rubrik's Identity Recovery solution for over 250,000 users. And the second, a Fortune 250 professional services firm selected Rubrik to displace its 15-year legacy backup vendor. Rubrik again outcompeted several new gen competitors for this opportunity. Rubrik will provide a unified cyber resilience platform across the customer's rapidly evolving hybrid and multi-cloud environments. Bipul Sinha: Let me now talk about the momentum we are seeing in cloud protection. Many sophisticated cyber attack inevitably occurs, organizations need to recover quickly and seamlessly, which is difficult across multiple workloads, tools and interfaces. Rubrik Security Cloud delivers complete cloud and SaaS protection from a single platform that understands the relationship among data, applications and identities regardless of where they live. We continue to build upon our core to cloud cyber resilience offerings, which delivers protection from the first line of code to full stack application in production across the major hyperscalers. For example, we recently announced Rubrik DevOps protection for Azure, DevOps and GitHub. This new solution is designed to ensure our customers most valuable intellectual property and development pipeline are protected and preserved. Now let me illustrate our momentum in cloud protection with 2 specific customer wins. A health and wellness technology company chose Rubrik cloud protection to protect a multi-petabyte mission-critical workload containing user data. Rubrik offered not only cyber resilience, but also a significant cost reduction compared to cloud-native backup solutions due to our unique platform. With Rubrik, this customer can confidently meet their minimal viable business plans with our immutable and secure data protection solution. And second, a Fortune 150 biopharmaceuticals company strengthened the partnership with Rubrik this quarter by adding cloud protection for its multi-petabyte public cloud data estate. We not only replaced native backup solutions, but also outcompeted new gen vendors. Rubrik was selected due to the strength of our cyber resilience capabilities as well as lower TCO with an estimated 30% annual cost savings. Bipul Sinha: Next, let's talk about our Identity business. As we have discussed, our comprehensive identity resilience platform uniquely combines identity posture and recovery with the Data Security Posture Management, or DSPM to deliver complete identity risk and remediation solutions. Our Identity line of business has been highly successful in garnering budget from CSOs, extending Rubrik beyond our traditional CIO and CTO buying personas. This business has achieved significant momentum in just over 3 quarters of the first general availability, reaching about $20 million in subscription ARR. In Q3 alone, we more than doubled the total number of identity customers. In fact, 40% of those identity customers added in the third quarter were net new to Rubrik. As you might recall, we started our identity journey with the release of identity recovery, which provides the rapid recovery of identity services following cyber attacks or operational failures to minimize business disruption. This quarter, we announced support for Okta Identity making Rubrik the only identity recovery solution to support Okta, Active Directory and Entra ID recovery. We also announced a new identity integration with CrowdStrike this quarter. With this integration, our customers can not only detect identity threats in real time, with Falcon Next-Gen Identity Security, but also surgically roll back malicious changes and restore their identity system to a safe operational state with Rubrik Security Cloud. CSOs are increasingly turning to Rubrik for a more comprehensive identity strategy. This quarter, we launched Rubrik identity resilience a higher tier addition above identity recovery. This solution monitors and protects both human and nonhuman identities, tracks misconfigurations and high risk or malicious changes within active directory and Entra ID. It also enhances risk posture and accelerates cyber recovery by linking identity-based information such as privileged access with Rubrik's DSPM's sensitive data context and activity. In just 1 quarter of selling, we closed 65 deals for identity resilience. This early momentum makes us very excited about what's ahead for identity resilience. Bipul Sinha: Let me share 2 illustrative customer wins. Our U.K. government agency added identity resilience for its large user base, alongside cloud data protection for Azure and AWS, as they sought to bolster resilience for critical national infrastructure amid rising cyber attacks in the U.K. This agency also consolidated several disparate tools with the Rubrik platform and replaced native cloud backup solution, which proved unscalable for the customer's massive and complex data estate. And second, a U.S. state agency turned to Rubrik this quarter after the rise of cyber attacks on governments nationwide. And in particular, after a recent incident, that impacted a critical state agency, seeking to bolster its cyber strategy and reduce recovery times, the agency chose Rubrik identity resilience and M365 protection for 100,000 users, replacing their native cloud protection and traditional data center identity backup. With Rubrik, cyber recovery times will move to mere hours compared to months with the incumbent solution. Bipul Sinha: Lastly, I will talk about our innovations in the AI space. As I mentioned earlier, agentic AI can unlock significant new efficiencies for every organization. It also introduces considerable risks, including threats by bad actors and the issue of hallucinations. To help accelerate AI transformation, we recently launched Rubrik Agent Cloud, or RAC, a new product suite that enables enterprises to deploy AI agents safely and confidently at scale. With the release of Rubrik Agent Cloud, Rubrik now operates 2 complementary product suites built on the same Rubrik platform, which combines application, data and identity context across all enterprise workloads. First, Rubrik Security Cloud for cyber resilience and accelerated cloud adoption. And second, Rubrik Agent Cloud for AI resilience and accelerated AI agent adoption. Our competitive advantage is Rubrik's core platform that sits in the center of data application and identity. Following the acquisition of Predibase last quarter, we now have agent context in the mix as well. Together, this forms the Rubrik Agent Cloud, the first integrated enterprise control layer for managing the AI agent life cycle. RAC answers the 3 most critical questions currently facing every CIO and CISO. Number one, what agents do I have? And what are their capabilities and activities. Number two, what data are these agents allowed to access? And are they operating within the enterprise guardrails? And number three, if something goes wrong, can I undo it. RAC provides organization with the ability to answer these questions through its core capabilities, namely agent monitoring, agent governance and full agent remediation. This includes Rubrik Agent Rewind, which we announced last quarter, Agent Rewind helps customers undo the mistakes of AI agents, which is crucial for a scalable and secure AI adoption. We also recently announced that Rubrik Agent Cloud will integrate with Microsoft Copilot Studio and AWS Bedrock. As we have said previously, we are still in the initial phase of a multiyear effort to scale Rubrik's AI solutions. Rubrik Agent Cloud is currently in beta, but we are very excited about the early customer enthusiasm. Looking ahead, we plan to expand our capabilities and investments to enable confident enterprise AI transformation and agentic work adoption. Bipul Sinha: In closing, I would like to share my gratitude to my fellow Rubrikans. Rubrik continues to win the cyber resilience market. And at the same time, we are defining the AI enterprise future. Rubrikan's collective focus and disciplined execution always inspired me. Also, I extend my sincere gratitude to our customers and partners. Your confidence in us motivates our continuous effort to lead and shape the future of cybersecurity and enterprise AI. And lastly, of course, thank you to you, our shareholders, for your continued support and trust. A number of you have mentioned to me the consistency with which we have been delivering the beat and raise cadence since our IPO. This is true. We have done so quarter after quarter. We are confident in closing out this year strong and continuing our great momentum into the next year and beyond. With that, I'm pleased to pass it over to our Chief Financial Officer, Kiran Choudary. Kiran Choudary: Thank you, Bipul. Good afternoon, everyone, and thank you for joining us today. We had a very strong Q3 marked by record net new subscription ARR and continued improvement in profitability metrics. These results reinforce our leading position in the large and expanding cyber resilience market. We are raising our Q4 outlook as we look forward to a strong close to the fiscal year. Let me start by briefly recapping our third quarter fiscal 2026 financial results and key operating metrics, and then I'll provide guidance for the fourth quarter and full year fiscal 2026. All comparisons, unless otherwise noted, are on a year-over-year basis. We are very pleased to have ended Q3 with subscription ARR of $1.35 billion, growing 34%. We added $94 million in net new subscription ARR, a record amount for Rubrik. We continue to drive adoption of our Rubrik Security Cloud, which resulted in $1.17 billion of cloud ARR up 53%. Our differentiated land-and-expand model benefits from multiple avenues to gain new customers and grow our footprint after the initial contract. Expansion occurs through data growth in existing applications, securing more applications or identities or adding more security products. As a result, we continue to see a strong subscription net retention rate, which remained over 120% in the third quarter. We are very proud of the high customer retention and expansion dynamics of our business. All vectors of expansion are healthy contributors to our NRR, highlighting the meaningful runway we have to more deeply penetrate our customer base. Adoption of additional security products contributed over 40% of our subscription net retention rate in the quarter, up from 32% in the year ago period. In the third quarter, we saw significant growth in our largest accounts with the number of customers contributing $100,000 or more in subscription ARR rising 27% to 2,638. These large customers now represent 86% of our subscription ARR, an increase from 83% a year ago. Furthermore, we added a record 23 new customers with subscription ARR of $1 million or more driving over 50% growth in our $1 million subscription base. For our third quarter, subscription revenue was $336 million, up 52%. Total revenue was $350 million, up 48%. Revenue in Q3 primarily benefited from a strong ARR growth. However, we again had tailwinds from our cloud transformation, resulting in higher nonrecurring revenue, which is accounted for as material rights. Material rights contributed approximately $25 million to revenue this quarter, modestly ahead of our expectation. Revenue growth normalized for material rights was approximately 36% in the quarter. Turning to the geographic mix of revenue. Revenue from the Americas grew 51% to $256 million. Revenue from outside the Americas grew [ 51% ] to $94 million. Before turning to gross margins, expenses and profitability, I would like to note that I'll be discussing results in a non-GAAP basis going forward. Our non-GAAP gross margin was 83% in the third quarter, compared to 79% in the year ago period. Our gross margin benefited from the revenue outperformance, including higher nonrecurring revenue and the improved efficiency of our customer support organization. As a reminder, we look at subscription ARR contribution margin as a key measure of operating leverage. We believe the improvement in our subscription ARR contribution margin demonstrates our ability to drive operating leverage and profitability at scale. Subscription ARR contribution margin was positive 10% in the last 12 months ended October 31, compared to negative 3% in the year ago period, an improvement of approximately 1,400 basis points. When normalizing for the $23 million in employee payroll taxes associated with the IPO in the prior period, the improvement was approximately 1,200 basis points. The improvement in subscription ARR contribution margin was driven by higher sales, the benefits of scale and improving efficiencies and management of costs across the business. Free cash flow was $77 million compared to $16 million in the third quarter of fiscal 2025. This increase was driven by higher sales, improving operating leverage and optimizing our capital structure. Kiran Choudary: Turning to our balance sheet. We ended the third quarter in a strong cash position with $1.6 billion in cash, cash equivalents, restricted cash and marketable securities and $1.1 billion in convertible debt. Let me now provide some context on our guidance. We are confident in our outlook driven by the robust cyber resilience market and strong demand for our unique offerings. We expect these factors, combined with our consistent and effective execution to deliver strong subscription ARR growth ahead. We plan to continue making operational investments across 2 key areas. First, we'll continue to invest in R&D to accelerate innovation in the large, but developing markets of data security and AI. Second, we will invest in our go-to-market, specifically targeting regions and verticals that offer the most attractive ROI. These go-to-market investments will also focus on achieving product market fit and scaling our newer innovations such as identity resilience platform and Rubrik Agent Cloud. Kiran Choudary: Now turning to guidance for the fourth quarter and full year fiscal 2026. In Q4, we expect revenue of $341 million to $343 million, up 33% or approximately 30% when normalized for material rights. We expect non-GAAP EPS of negative $0.12 to negative $0.10 based on approximately 201 million weighted average shares outstanding. For the full year fiscal 2026, we now expect subscription ARR in the range of $1.439 billion to $1.453 billion, reflecting a year-over-year growth rate of approximately 32%. We expect total revenue for the full year fiscal 2026 in the range of $1.280 billion to $1.282 billion, up approximately 44% or 35% when normalized for material rights. We expect material rights related to our cloud transformation to contribute approximately $68 million to revenue in fiscal year 2026. We expect non-GAAP subscription ARR contribution margins of approximately 9%. We expect non-GAAP EPS of negative $0.20 to negative $0.16 based on approximately 197 million weighted average shares outstanding for the full year. We expect free cash flow of $194 million to $202 million. As we progress through the final stages of our successful cloud journey, our reported revenue growth has seen significant tailwinds from our cloud transformation, including material rights in fiscal 2026. In fiscal 2027, dynamics related to our successful cloud transformation and a substantial reduction in material rights revenue will represent a headwind to our reported revenue growth. However, normalized revenue growth will be ahead of subscription ARR growth. As we have always communicated, subscription ARR is the primary top line metric to evaluate our business performance as it is not impacted by the aforementioned accounting dynamics related to our cloud transformation. In terms of profitability, we will continue to stay focused on taking advantage of the market opportunity in cybersecurity and AI while balancing growth with improved efficiency. Based on our current investment plans, we expect to deliver modest improvement in our subscription ARR contribution margin and modestly higher free cash flow for the fiscal year 2027. In addition, we included some additional modeling notes in our investor presentation. In closing, we are pleased with our strong performance in the third quarter. We look forward to finishing the year strong, given our leadership, innovation and ability to execute on a large and growing market opportunity. With that, we'd like to open up the call for any questions. Operator: Your first question comes from Saket Kalia of Barclays. Saket Kalia: Nice quarter. Bipul, maybe for you. It's very clear that you're taking share in kind of the core cyber resilience, right, the first of 3 pillars. But you're also growing other businesses like identity. And so I'm curious, how additive can identity be to an average data protection deal? And maybe relatedly, is identity replacing any established tools or is that creating new budget as you sell increasingly to CISOs? Bipul Sinha: Identity is completely additive to the deal. So it is a net new buyer for Rubrik. We are selling identity to the CISO organization to IM persona. And in some cases, we are replacing legacy or new gen vendor, a new gen identity recovery vendor. In other cases, it's a white space. Nevertheless, it's a net new buyer for Rubrik, which is a CISO organization and a net new solution that we have created completely from scratch. In fact, this product went into GA -- first GA in December last year. And we are seeing 40% of new customers last quarter is net new to Rubrik. So this is very exciting. Kiran Choudary: Saket, this is Kiran. I also wanted to add that in my prepared remarks, I had mentioned that our NRR was again 120% plus for the quarter. And while all the drivers were good contributors, the security component crossed 40% and identity is one of the key components of that -- or drivers for that. Saket Kalia: That's super helpful. I would love to squeeze in just 1 housekeeping question, Kiran, maybe if I can for you. The SaaS ARR line really speaks for itself. But I was wondering if you could just comment on the non-SaaS ARR line, right? There's an element of there that's conversion. There's also some natural churn. Can you -- since we're all together here on the call, can you just talk about how we should think about modeling that going into Q4 and then maybe into next year? Kiran Choudary: Sure, Saket. I'll add my thoughts to that. So as you know, we are predominantly a cloud SaaS business now. We are very pleased with how the cloud transformation has progressed in the last few years. This quarter, we were around 87%. Cloud ARR as a percentage of subscription and we grew 53%. When you look at the non-cloud run, that is one of the lines which is also contributing to the cloud ARR growth, one with smaller components, but is contributing. So as a result, that declines, and that's declined now for a few quarters. And we'll continue a bit more because we believe there is more room to run in our cloud ARR -- cloud business as a percentage of subscription ARR. Operator: Your next question comes from Matt Martino of Goldman Sachs. Matthew Martino: Bipul, do your comment that bookings from legacy replacement accelerated year-over-year stood out to me. I guess from your perspective, what's driving the acceleration there? Is it the modernization ahead of AI that you flagged in the prepared remarks or maybe a growing recognition from CIOs that they simply can't wait to modernize due to the growing threat vectors out there. Bipul Sinha: Thanks. It's both. It's definitely preparing for AI and modernizing the infrastructure, that's a big driver. And the other driver is cyber attacks are inevitable and Rubrik has a unique platform that delivers cyber recovery, leveraging our preemptive recovery engine that is unique in the marketplace. And our speed of recovery is the key factor in making this decision. So CIOs and CISOs are looking at their legacy landscape, including new gen vendors and saying that I'm at risk. Cyber attacks are going to come to me. And if I can't keep my business up and running, it threatens the very existence of the business, and that's what is also driving legacy replacement. Operator: Your next question comes from Fatima Boolani of Citi. Fatima Boolani: Bipul, this one I want to direct to you. Since your IPO, there has been an absolute avalanche of new product introductions and new capabilities and you're showing and putting points on the board with respect to installed base and new customer uptake in adoption. What I wanted to ask you was just with respect to the platform having expanded so dramatically in the span of the last 18 months. I'm curious how that's influencing your overall sales strategy? And really, the spirit of the question here is what's become very involved and certainly, the companies we cover and the broader enterprise software is this notion of providing flex or consumption-oriented type vehicles to enable customers to have a more fulsome frictionless access to the full portfolio. So a long-winded way to ask you, is that something that you would potentially consider just given how quickly and how robustly the platform's expanded? And how would you idea around that? Bipul Sinha: Thanks, Fatima. So if you look at Rubrik from day 1, our strategy has been a true platform company. And you might ask what is a platform company. Our definition of a platform company is a product when -- a platform when the customer adopts more than 1 product, their value from the platform goes up. I'll give you an example. When our customers buy Rubrik Security Cloud for both data center as well as AWS or Azure cloud, if there is a threat actor in the cloud and same threat actor is in the data center, we can auto correlate threat and give you the full cyber resilience intelligence and recovery on that threat actor. You don't have to pull the logs into Splunk and then try to analyze and figure out what's going on. Rubrik automatically does that for you. Now the same platform is expanded into identity. So now you can actually see what's happening to your identity vis-a-vis data when the privilege gets escalated. Now the same platform we have launched a new product suite in Rubrik Agent Cloud. So now we have 2 distinct product suite. Rubrik Security Cloud for cyber resilience, Rubrik Agent Cloud for enterprise AI acceleration. So our strategy has always been give customer a comprehensive platform and be the strategic IT vendor for that customer for years and years to come. Obviously, we want to make it easier for our customers to consume Rubrik product, try new Rubrik product. And we don't easily lose customers because we provide a mission-critical solution and customer retention has been one of the hallmarks of Rubrik. So we are looking at all avenues going forward to make it easier for our customers to adopt Rubrik, consume Rubrik because we are selling is only 5% of my job, 95% of my job is to ensure customer delight, the first use experience, repeated user experience, expansion experience and providing end-to-end cyber resilience. Operator: Your next question comes from John DiFucci of Guggenheim. John DiFucci: This is an impressive quarter. And I'd just like to congratulate the extended Rubrik team beyond even those on this call. Bipul, I want to sort of go high level with you on something because you hit something that everybody is hitting now and we are just trying to figure out. It seems really early when it comes to securing AI agents. But things can move really fast. It seems that everybody in security is saying they're best positioned to serve this role, which looks like it can be huge, right? Can you explain why Rubrik is well positioned to capture this opportunity or maybe even just part of the opportunity? And if that's the case, what else do customers -- what else will they need to have beyond Rubrik to solve this problem? Bipul Sinha: Thanks, John. That's a really good question. If you take a step back, Rubrik is all about data, identity and business applications. And these are the 3 main things even to deliver AI. AI is not a purely security question. Neither it is purely operations question. AI sits at the intersection of security, which is risk management and governance, plus the operations, which is how do you deliver the accurate AI, how do you fine-tune the model? How do you create real-time operational guardrails and observability and undo action if they misbehave because of cyber compromise or hallucination. And Rubrik is squarely at the intersection of operations and security. So this is a natural place for us to deliver a complete agentic operation platform, agentic management platform, if I can be so bold to call it agentic ERP. And what does agentic ERP needs to deliver? 3 things. How many agents do I have, including the ones that is sanctioned as well as the ones that are non-sanctioned. What the hell they are doing? What do I want them to do in terms of my operational guardrail? Are they hallucinating, can I make them more accurate so that humans can be confident of the results of the AI agents. And if they misbehave, can I take -- press the rewind button and take away the effect of them, of misbehaving agent. So this requires an end-to-end complete platform across monitor, govern and remediate. So this is a very natural extension to Rubrik's core strategy. And you know what? On top of it, Rubrik is also secure data lake. So we have additional opportunity to bring Rubrik data to do fine-tuning of the model, to deliver more accuracy with Predibase acquisition, we have the ability to virtualize GPU, to reduce the cost or to multiplex different training model to be able to deliver perfect guardrail for our customers to have confidence in the agentic actions. So we believe that we are strongly positioned to deliver this new infrastructure product suite, Rubrik Agent Cloud. And then we are integrating this across the ecosystem. You saw our announcement with Copilot Studio, with AWS Bedrock, we are extending and expanding this platform across all the tools that users can use to build agents. And this is, again, a [ strategic ] opportunity just like cyber resilience across all business applications. Rubrik Agent Cloud is product suite across all agent tool builders, whether it's AWS, Azure, GCP, M365, Salesforce, Agentforce, no matter whether it is infrastructure as a service agent or platform as a service agent, Rubrik Agent Cloud is giving our customers the confidence to do the AI transformation, deploy agents at a scale and truly take advantage of the AI opportunity. John DiFucci: That actually -- that is the first time I've heard anything about this described in a way that I can understand. So thank you very much. Operator: Your next question comes from Brad Zelnick of Deutsche Bank. Brad Zelnick: Excellent. And I echo my congrats as well. What a great quarter. And my question actually follows on what John just asked about Rubrik Agent Cloud, across monitor, govern and remediate. And I reflect on the announcement this week adding Amazon Bedrock along with Copilot Studio support. Bipul, how are these partnerships structured with the AI platforms. Is there a co-investment in go-to-market and co-innovation on product? And what are the ways you'll monetize Rubrik Agent Cloud along with the platforms. Bipul Sinha: Thanks, Brad. We have been working with hyperscalers for a number of years. And our initial -- our big partnership started with cyber resilience, and we have found tremendous success. We have hundreds, if not thousands of customers with them and joint customers where we are helping hyperscalers deliver a complete business transformation, cloud transformation with confidence of cyber resilience. And now we are expanding on that partnership to bring Rubrik Agent Cloud. And so the idea is if you develop your agents on AWS Bedrock or on Copilot to Studio, you can manage that on Rubrik Agent Cloud. And so we have prebuilt go-to-market partnership with hyperscalers, and we expect to leverage those existing infrastructure with the new teams that are involved on the AI side to expand the go-to-market. Brad Zelnick: And from a monetization standpoint, Bipul, these are dedicated SKUs that are incremental. The strategy isn't necessarily to migrate customers up different tiers of the core product. Is there anything we should know about the way that you'll monetize? Bipul Sinha: So Rubrik Agent Cloud is a completely separate product suite. It is early where the product is in beta, but we are getting very strong customer feedback on these products. I'll give you a couple of examples, a very large healthcare organization said that they are slow to adopt agents because they have yet to find a platform that they can confidently operationalize agents, which means that monitor and have visibility into agents. There was another pharma company where the exec said that why are we not having a product like Rubrik Agent Cloud already. And they said that they see our vision as really enabling them to an agentic future, and this is the right idea. Obviously, all of this is very early, but we are very encouraged by the reaction and obviously, we'll update you as we make progress, but I anticipate there to be a separate product suite that we'll sell. Operator: Your next question comes from Eric Heath of KeyBanc. Eric Heath: Great. Bipul and Kiran, I wanted to follow up on your comments about the strong beat and raise cadence that you've acknowledged and the outlook for Q4. When I look at the guide, it's shown a seasonally stronger growth rate than 3Q, which hasn't historically been the case. So can you just talk about the dynamic there? Is that purely a function of the sales comp change this year? Is it more so a reflection of the strong pipeline you see? Or anything else to call out? Kiran Choudary: Thanks, Eric. This is Kiran. I'll take that one. So we're very pleased with the Q3 results we delivered in terms of scale and growth. That gave us the confidence to raise Q4 as well. It's about a 3% raise on the net new ARR, 3% plus based on the implied Q4 guide from the last quarter's call. But as you know, we run the business on an annual basis on net new ARR and we have spoken about that in the past as well. So we look at the total net new ARR for the year, really, that's what we plan for and look to deliver. So the annual comp plan changes have progressed really nicely, but we have to finish the year as well, and we can give you an update on that after Q4. Operator: Your next question comes from Gregg Moskowitz of Mizuho. Gregg Moskowitz: And congratulations on the strong execution. I'd like to go back to Identity because Identity Recovery is off to a really strong start. And by the way, the feedback was also positive at AWS Reinvent this week. Bipul, when you look ahead, so Rubrik has many thousands of customers that you can potentially cross-sell into. And as you've noted, you're already landing with Identity as well. So when you look at Identity Recovery and now Identity Resilience in addition, how are you thinking about penetration rates for this part of the platform going forward? Bipul Sinha: We believe that Identity Recovery is a widely applicable horizontal platform in terms of the Identity Security strategy that we have. And going from Identity Recovery to Identity Resilience, we are really adding before and during pieces to ensure that if there is a privilege escalation, what kind of sensitive data gets exposed to. And that's where we are bringing the DSPM capabilities with identity capabilities to expose the full risk. Because if you take a step back, cyber resilience assumes that the attacks will happen to you. So if you know that attacks will happen to you, you have to understand the risk of the attack and be able to remediate. And the risk of the attack, you need to understand data risk and you need to understand the identity risk. Because you can't understand the full risk without understanding data and identity both. And then in terms of remediation, you have to remediate both, you need to do a cyber recovery on all the data to ensure that your applications are up and running plus you have to also recover Identity system partially or fully. So we believe that for full cyber resilience, both identity and data is applicable everywhere, Obviously, these are early days. We are just over 3 quarters into it. We are just about $20 million in subscription ARR. We doubled our number of customers in Q3. The customer excitement is very, very high. I'll give you an example. Our European consumer technology company. They were really worried about -- is scattered spider because one of their suppliers got hit. And as you know, scattered spider is detrimental to identity systems as well as virtual machines because they are bypassing the traditional EDR. So there is increased awareness of importance of identity systems, both full availability of the identity system plus the escalations, which are illegal and how data gets impacted. So we have a full vision to really create full cyber resilience solution. And as we said, we are also partnering with CrowdStrike ITDR solution to provide end-to-end confidence for our customers saying that Falcon will detect and will help roll back bad changes. Operator: Your next question comes from Todd Coupland of CIBC. Thomas Ingham: I wanted to ask about net new. That's been a little bit lumpy the last few quarters. And I'm just wondering if the acceleration that you experienced this quarter and going into Q4, is that the new normal? Or should this still be considered an area of volatility as we think about '27? Kiran Choudary: Hi Todd. This is Kiran. I'll take that one. So very pleased with the Q3. Net new ARR was a record for the company, $94 million. But the way to look at net new ARR really in our business is on an annual basis, and that's the number we planned for when we start a year, and there's obviously shifts between quarter-to-quarter because of deals pipeline, et cetera. So I would focus on the annual number, including the guide and then there's going to be some quarterly movements because of compared to previous years and timing. Operator: Your next question comes from Junaid Siddiqui of Truist. Junaid Siddiqui: Bipul, with cyber insurance requirements tightening and ransomware costs increasing, are you seeing Rubrik's platform play a role in lowering those insurance premiums for customers and do you see this convergence of identity and data security becoming a differentiator for cyber insurance and compliance frameworks. Bipul Sinha: Thanks Junaid. Absolutely, you need to have both identity resilience and cyber recovery to be able to drive complete cyber resilience. And for insurance company to underwrite, there is asymmetry of information and for them to have confidence that the customers have the right technology, it is definitely attractive for them to actually recommend Rubrik. In fact, one of the insurance companies, which is our customers actually became our reseller to their customer base, based on that same thesis. We believe that we are still in the early innings of cyber resilience as very large segment, and I would argue that the most important segment of cybersecurity and we believe that as this market continues to expand and as we continue to lead this market into the future around full cyber resilience across data and identity, we believe that there are a lots of opportunities, including around insurance for us. Operator: Your next question comes from Keith Bachman of BMO. Keith Bachman: I wanted to go back to the agent market. The identity market seems like a tremendous opportunity in a natural adjacency. I still struggle a little bit with the opportunities associated with the agent market. And so I wanted to just ask it in maybe some different threads, a, is the go-to-market going to be different for the identity that is to say, is there -- do you anticipate it being a different buyer in the agent market? It would seem to me that it's a different buyer, but I just wanted to get your perspective. And b, how do you think the competitive landscape is going to shape up. It's super early, and there's probably going to be more than 1 winner. And then finally, is there any thoughts about when you might emerge from beta to actually have production environments or GA into the market? Bipul Sinha: So if you look at agents, they assume identity, they work on data and they operate on many applications at a scale. And as I said before, the Rubrik platform is a combination of data, identity and applications. So we are naturally positioned to take advantage of this agentic opportunity. We are not building a platform for people to build agents. They have many platforms for them to build agents. We are helping our customers operationalize agents and have confidence and governance controls to be able to deliver the agentic outcome because that's the biggest inhibitor in terms of AI going into; production. And that's what we are focused on. In terms of the market, obviously, we are early. As I said, we are still in beta. We expect to go GA, not too far in the future. We'll continue to learn from this market, continue to enable our customers on this journey. So far, it feels like operations team, which is CTO, CIO organization would be responsible for agentic work transformation across line of businesses. So there is a convergence in the buying persona. But again, it's very early. We learn in the market, but we believe that we have a very strong vision for this market. And again, as this market evolves, we want to really take our customers on this agentic journey. Operator: Your next question comes from Shrenik Kothari of Baird. Shrenik Kothari: And many congrats on great execution. Bipul, of course, you mentioned we're launching the Identity Resilience this quarter and already noted, pretty strong early adoption. Can you speak to the uplift versus Identity Recovery? And just on that note, Kiran, highlighted that security represents over 40% now and was a major contributor to sustaining and or above 120%. Just with these modules that you're adding resilience and agent cloud adding more breadth, like just how should we think about the durability of that NRR. Kiran Choudary: Kiran, do you want to take the question? Kiran Choudary: Yes. So Shrenik, this is Kiran. I'll just give you some thoughts on how to think about the NRR. So obviously, and continued to have strong NRR 120% plus, which we see as best-in-class. And our business lends itself to strong NRR. We have a very strong gross retention, and this has been the case historically. And on top of that, we have multiple expansion vectors through different products. And that helps drive the strong NRR. But at the same time, we are scaling as a business with the strong growth rates and $1.35 billion in subscription ARR this quarter. So naturally, NRR tends to moderate over time at scale, but it will be strong NRR just given the drivers of the business. And then on the question you have on Identity Resilience, I would say it's early. We have just launched it. Obviously, that has got more features backed into it. So there will be a price uplift, but I think we need more data points to give you a sense for the amount of uplift. Shrenik Kothari: Great. Very helpful. Thanks a lot. Congrats again. Operator: There are no further questions at this time. I would hand over the call to Bipul Sinha for closing remarks. Please go ahead. Bipul Sinha: In closing, I would say thank you, everyone for continuing to be on Rubrik's journey. As I've mentioned before, our ambition is to build the next 100-year-plus company. And that 100-year plus company will be built based on all participants in the ecosystem to our customers, to our partners, to all the Rubrikans and our ability to continue to lead the market, imagine new product, validate that vision and produce the product. I'm very excited that Rubrik is able to organically create products such as Identity Resilience and Identity Recovery and create an independent product line and business. We want to continue to be on this journey with you. Thank you so much for your support. It's still early days for Rubrik. Look forward to talking to you soon. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.
Mike Chang: Good afternoon, and welcome to Samsara's Third Quarter Fiscal 2026 Earnings Call. I'm Mike Chang, Samsara's Vice President of Corporate Development and Investor Relations. Joining me today are Samsara Chief Executive Officer and Co-Founder, Sanjit Biswas; and our Chief Financial Officer, Dominic Phillips. In addition to our prepared remarks on this call, additional information can be found in our shareholder letter, press release, investor presentation and SEC filings on our Investor Relations website at investors.samsara.com. The matters we'll discuss today include forward-looking statements. Actual results may differ materially from those contained in the forward-looking statements and are subject to risks and uncertainties described more fully in our SEC filings. Any forward-looking statements that we make on this call are based on assumptions as of today, December 4, 2025, and we undertake no obligation to update these statements as a result of new information or future events unless required by law. During today's call, we'll discuss our third quarter fiscal 2026 financial results. We'd like to point out that the company reports non-GAAP results in addition to and not as a substitute for or superior to financial measures calculated in accordance with GAAP. We also report both actual and constant currency growth rates for certain metrics. On the call, we'll only provide constant currency commentary when there's a difference. Reconciliations of GAAP to non-GAAP financial measures and additional information on constant currency are provided in our press release and investor presentation. We'll make opening remarks, dive into highlights for the quarter and then open the call up for Q&A. With that, I'll hand over the call to Sanjit. Sanjit Biswas: Thanks, Mike, and thank you, everyone, for joining us today. Samsara delivered another strong quarter of durable and efficient growth. We ended Q3 with $1.75 billion in ARR, growing 29% year-over-year. We also achieved our first quarter of GAAP profitability. In Q3, we added 219 customers with $100,000 plus in ARR, a quarterly record. Our $100,000-plus ARR customers now contribute more than $1 billion of ARR, growing 36% year-over-year. We also added 17 $1 million-plus ARR customers tied for a quarterly record. Our growth is driven by our strategy to partner with the world's largest and most complex operations organizations. Q3 was a milestone quarter for large customers, and we partner with many new organizations, including the state of New York, one of the world's largest providers of oilfield services and one of the world's largest and most diversified media corporations. We're proud to partner with these industry leaders, driving safer and more efficient operations together. Large enterprises are quickly digitizing their operations, and they're demanding a partner that delivers scale and performance. We've become their platform of choice for a few key reasons. First, we unified data from many disparate systems across all their vehicles, equipment and frontline teams in a single system of record. Second, we solve challenges across their operations with our broad multi-application platform. Third, we use our massive data asset and AI to deliver actionable insights that save our customers money. Fourth, we provide an enterprise-grade platform that delivers the scalability, reliability and security our customers require. And lastly, we provide world-class support and expertise to help our customers drive change management and deliver outcomes, resulting in clear and fast ROI. Sanjit Biswas: I'd like to share 2 stories of new customers from Q3 that are using Samsara to transform their operations. The first is in student transportation, which is a complex and highly regulated network responsible for the safe transit of 26 million students every day. After landing First Student, the largest school bus provider in North America, in Q2, we partnered with another 1 of the top 5 largest school bus providers in Q3. They transport over 1 million students today in more than 500 school districts across 30-plus states and provinces. Their initial purchase included our Video-Based Safety, Telematics and AI Multicam products. They're looking for a highly accurate and reliable AI solution to enforce their 0 tolerance policy on driver mobile use and eliminate in-cab distractions and driver drowsiness. With Samsara, they'll be able to detect, alert and reduce these behaviors. The second example is with one of the largest mechanical contractors in the U.S. They have over 5,000 employees specializing in custom HVAC and plumbing systems for commercial and industrial projects. They help build major sports stadiums and critical medical and research facilities, and they also design and install the complex systems that power many modern data centers as part of the AI infrastructure build-out. The company is using our Video-Based Safety, Telematics, Connected Training and Driver Qualification products to ensure their complex field operations remain safe and efficient. In their pilot with Samsara, they saw a 44% reduction in the total safety event rate and a 72% reduction in mobile usage. We're proud of the impact we're creating together, and we're excited for the decades-long opportunity ahead. Sanjit Biswas: Physical operations are the mission-critical infrastructure to keep the world running, representing over 40% of global GDP. These asset-heavy and labor-intensive organizations typically spend around 80% of their revenue on labor and assets. Running these complex operations carries significant inherent risk, from driving large commercial vehicles carrying hazardous materials to deploying frontline workers for services to operating heavy machinery. Unfortunately, a frontline worker dies from a work-related injury approximately every 99 minutes in the U.S. We help our customers protect their workers and support their top safety goals that have a material impact on their financials, brand and talent. This work is critical because accidents and noncompliance directly translates to substantial financial costs, including higher insurance premiums and large payouts. And these costs are increasing with the rise of large nuclear verdicts and accident litigation. Our customers also care about protecting their reputation to maintain a competitive edge, which can be hurt by a weak safety culture or history of incidents. And lastly, employees stay with companies that demonstrate their commitment to keeping them safe, which is important in a tight labor market. As we look ahead, we see a huge opportunity for AI to transform safety coaching and more broadly, automate coaching across operations. This will help our customers scale their coaching programs without adding more head count. Sanjit Biswas: We recently added -- we recently launched new AI-powered coaching features: Automated Coaching, Group Coaching and Workflow Automations. Starting with Automated Coaching. This is the first advanced automated coaching to help with the entirety of the driver experience, including safety, compliance, idling and more. Coaches can quickly create their own digital doubles or use premade avatars to create tailored coaching videos for each worker. Next, Group Coaching helps managers recognize and coach front-line workers in group settings using operational data. It uses AI to generate ready-to-use coaching session that highlights positive recognition, fuel efficiency, compliance and safety. Last, Workflow Automations is a no-code workflow builder that uses our data asset to streamline coaching and training processes. It allows for the intelligent management of compliance and safety programs, automatically directing lower priority events to the driver for self-review while ensuring that high priority incidents are flagged for manager coaching. We're excited to introduce these new AI-powered features for our customers. All of our innovation is translating to real-world customer impact. We recently released our safety report, which analyzed data from over 2,600 Samsara customers operating medium and large fleets. Fleets using are dual-facing AI dash cameras, real-time in-cab alerts and driver coaching saw an aggregate 37% reduction in accidents after the first 6 months, and this increased to a 73% reduction in accidents after 30 months. These are life-saving outcomes that show our platform is transforming safety culture and demonstrating measurable results for our customers. Sanjit Biswas: Now I'd like to turn to the international growth opportunity. I've met with dozens of customers in our international markets this year. Every time I meet with them, I'm inspired by the long-term opportunity to expand our impact. There are a few reasons for this. First, the international market is very large. There are more assets and frontline workers in Europe, Canada and Mexico than in the U.S. Second, the international market is less penetrated than the U.S. and earlier in its digitization journey. Third, we believe the opportunity for impact and customer ROI is similar to the U.S. These customers are achieving similar savings from insurance payouts and premiums, fuel costs, improve worker retention and asset utilization. Over the last few months, we hosted our annual Go Beyond customer events in London and Mexico City. At Go Beyond U.K., we announced a new feature for our European customers, Samsara Smart Compliance. This helps fleet use in-cab audio alerts to prevent costly driving time infringements before they occur. We've also continued to strengthen our ecosystem through industry-leading partnerships in the U.K. and Mexico. This quarter, we announced a new partnership with Allianz, one of the largest general insurers in the U.K. This partnership gives Allianz insured commercial customers preferred access to Samsara's AI safety cameras and our connected operations platform. Also, building on our successful relationship with Element Fleet Management, we extended our partnership to the Mexico market. Together, we are providing organizations with an integrated full life cycle solution that drives down operational costs and enhances safety and efficiency in the region. We're excited about the impact we're making for our customers every day, transforming their operations to be safer, more efficient and more sustainable. We're just getting started and look forward to the multi-decade opportunity ahead. We're also proud that our long-term growth potential was recognized by Fortune this quarter, ranking us seventh on their Fortune Future 50 list. We want to thank all of our Samsarians, customers, partners and investors for joining us on this journey. I'll now hand it over to Dominic to go over the financial highlights for the quarter. Dominic Phillips: Thank you, Sanjit. Q3 was another quarter of durable growth and improved profitability. The quarter was highlighted by strong performance across several key metrics, including 23% year-over-year net new ARR growth in constant currency, our highest growth rate in the past 7 quarters; 219 $100,000-plus ARR customers added, a quarterly record; and 17 $1 million-plus ARR customers added, tying a quarterly record; 8 $1 million-plus net new ACV transactions in Q3, also tying a quarterly record; 20% of net new ACV from emerging products launched since last year; and achieving our first quarter of GAAP profitability. More broadly, our durable and increasingly efficient growth demonstrates the large yet still early opportunity for digital transformation across physical operations. Looking ahead, we believe Samsara is well positioned to deliver durable growth and create long-term shareholder value for several key reasons. First, we have a unique defensible data advantage. By instrumenting physical assets with IoT devices, we generate a large and growing proprietary data asset that cannot be easily replicated or sourced elsewhere. Second, AI is accelerating our innovation, enabling us to release new products and meaningful features at a faster pace, driving higher customer engagement and usage. Third, our business model scales with fiscal assets rather than head count or knowledge workers and aligns us with end markets poised to benefit from major initiatives such as the global AI infrastructure build-out. Fourth, our products have a differentiated value prop and mission-critical workflows, delivering fast, tangible ROI and quick payback periods that make us essential to our customers' operations. And lastly, we're targeting the large and less discretionary operations budget, which represents approximately 80% of our customers' revenue on average. And because we help them optimize the significant and durable cost base, we have a large opportunity to drive customer impact and long-term growth. Dominic Phillips: Okay. Now turning to our results. Q3 ending ARR was $1.75 billion, an increase of 29% year-over-year. Within that, we added $105 million of net new ARR, an increase of 24% year-over-year or 23% in constant currency, resulting in the second consecutive quarter of accelerating sequential growth and the highest net new ARR growth rate in the past 7 quarters. And Q3 revenue was $416 million, growing 29% year-over-year. Several factors drove our strong top line performance in Q3. First, large customer momentum is leading to higher growth at scale. In terms of large deals, we signed 8 $1 million-plus net new ACV transactions in Q3, tying a quarterly record. This reflects the success of our R&D and go-to-market investments to support these larger customer opportunities. At the same time, these larger deals have inherently longer and less predictable sales cycles, which could introduce more variability into our quarterly ARR results than in the past. In terms of large customers, we ended Q3 with 2,990 $100,000-plus ARR customers, a quarterly record increase of 219. ARR from $100,00-plus customers exceeded $1 billion, increasing 36% year-over-year, resulting in accelerating sequential growth at a larger scale. $100,000-plus ARR customers now represent 60% of total ARR, up from 57% 1 year ago. We also ended Q3 with 164 $1 million-plus ARR customers, tying a quarterly record increase of 17, $1 million-plus ARR customers contributed more than 20% of total ARR, and year-over-year ARR growth from this cohort accelerated sequentially for the second consecutive quarter at a larger scale. Dominic Phillips: Second, our customers increasingly utilize Samsara as a system of record for physical operations by subscribing to multiple applications on a single unified platform. Over 95% of our $100,000-plus ARR customers subscribe to 2 or more products, and approximately 70% subscribe to 3 or more products. In Q3, 10 of the top 10 net new ACV deals included 2 or more products and 9 of the top 10 included 3 or more products. In Q3, we signed a large expansion with one of the world's largest home improvement retailers. In the quarter, they increased their total licenses for video-based safety, vehicle telematics and Connected Equipment after achieving significant ROI, including a more than 50% reduction in total auto liability claims by leveraging Samsara's AI detections. In Q3, they also added Connected Workflows to digitize and streamline operational processes for vehicle life cycle management and driver activities, covering everything from preventative maintenance and incident review to vehicle disposal and ride-along compliance. As a result of our strong multiproduct adoption, we achieved our target dollar-based net retention rate of approximately 115%. Dominic Phillips: And third, we demonstrated strong execution across several frontier markets. In terms of emerging products, 20% of our net new ACV in Q3 came from our new products launched since last year, including AI Multicam, Asset Maintenance, Asset Tags, Connected Training and Connected Workflows. 34 transactions in Q3 included more than $100,000 in emerging product net new ACV. 8 of the top 10 net new ACV transactions included an emerging product, and Asset Tags ARR grew more than 400% year-over-year. Also, Q3 included our largest ever Asset Tags deal with a global leader in chemistry solutions and engineered equipment for the oil and gas industry. The company manages thousands of reusable chemical totes but has historically lacked visibility into where these high-value assets are deployed, how long they remain at customer sites and overall inventory levels. By adopting Samsara's Level Monitoring Asset Tags, they'll gain real-time visibility for the first time, unlocking the ability to improve their tote fleet efficiency by 25% and through the elimination of excess inventory and more efficient utilization. Additionally, the customer expects to cut the manual labor required for quarterly inventory checks by more than 90%, driving immediate productivity gains and significant cost savings. Dominic Phillips: In terms of end markets, we saw strong momentum across construction and public sector. Construction contributed the highest net new ACV mix of all industries for the ninth consecutive quarter and public sector contributed its highest ever net new ACV mix with wins across Texas, New York, Massachusetts and Chicago. Also, public sector net new ACV grew approximately 100% year-over-year, its highest growth rate in almost 3 years and crossed more than $100 million in ending ARR. And in terms of international, 16% of net new ACV came from non-U.S. geographies. Europe contributed its highest ever quarterly net new ACV mix, and year-over-year net new ACV growth in Europe accelerated for the second consecutive quarter, resulting in its highest growth rate in the last 7 quarters. And as a result, Europe's overall ARR growth rate also accelerated for the second consecutive quarter. Dominic Phillips: In addition to driving strong top line growth, we continue to deliver operating leverage across our business as we scale. Non-GAAP gross margin was 78% in Q3, a slight increase year-over-year. Non-GAAP operating margin was a quarterly record 19%, up 9 percentage points from 1 year ago, and free cash flow margin was 13% in Q3, up 4 percentage points year-over-year. Dominic Phillips: Okay. Now turning to guidance based on FX rates as of November 1. For Q4, we expect revenue to be between $421 million and $423 million, representing 22% year-over-year growth or 21% growth in constant currency; non-GAAP operating margin to be 16%; and non-GAAP EPS to be between $0.12 and $0.13. For full year FY '26, we expect revenue to be between $1.595 billion and $1.597 billion, representing 28% year-over-year growth; non-GAAP operating margin to be 16%; and non-GAAP EPS to be between $0.50 and $0.51. And finally, please see the additional modeling notes in our shareholder letter. Dominic Phillips: So to wrap up, in Q3, we delivered high growth at scale while also delivering operating efficiency gains. Looking ahead, we believe Samsara is well positioned to sustain durable and efficient growth because we generate a unique defensible data asset that powers differentiated AI innovation and deeper customer engagement. We are aligned with secular growth in physical operations that is poised to benefit from major initiatives such as the global AI infrastructure build-out, and we deliver tangible ROI through mission-critical workflows, helping customers achieve fast payback periods on their investments. We look forward to building on this momentum as we help our customers operate more safely, efficiently and sustainably at a greater scale. And with that, I'll hand it over to Mike to moderate Q&A. Mike Chang: Thanks, Dominic. We will now open the line up for questions. [Operator Instructions] The first question today comes from Michael Turrin with Wells Fargo, followed by Alex Zukin with Wolfe. Michael Turrin: Sanjit, the large customer momentum, really standing out the past couple of quarters here. Can you just speak to what's enabling that from a product perspective and how significant a competitive advantage that is becoming for Samsara here? Sanjit Biswas: Sure. So we've been investing in the sort of scale and security and infrastructure needed to serve large customers for a number of years, both on the R&D and the go-to-market side. I would say on the product side, it's our ability to just manage these massive amounts of data, also customize the product to the needs of these large complex organizations and their org structures. And then on the go-to-market side, we really operate as a true partner to these companies, understanding their business, figuring out how to unlock the most value for them, and then we tailor the use of the product to meet those needs. I think the combination of those 2 has been the big unlock, and we're seeing it come through in the numbers now. Michael Turrin: Just to follow on, Dom, I know it's early, but you have a fairly good level of visibility in this model. Is there any high-level commentary you're willing to give us on fiscal '27 that's just helpful as we're rolling through some of the results from the rest of the year here? Dominic Phillips: Yes. So look, yes, we're not in a position obviously to give formal guidance for next year. Q4 tends to be our seasonally largest quarter, and so we really need to get through the next couple of months before we finalize our FY '27 plan. I will say that based on our current outlook, I would expect that our initial FY '27 revenue guide in terms of the dollars will be higher than where current consensus is right now just given the Q3 outperformance. Mike Chang: The next question today comes from Alex Zukin with Wolfe Research, followed by Keith Weiss with Morgan Stanley. Aleksandr Zukin: Sanjit, maybe for you. The contribution from new products, that jumped to 20% of net new ACV from 8% last quarter. Maybe just dig a little bit deeper of kind of what went better or what's outperforming your expectations to drive that kind of inflection. And then I've got a quick follow-up. Sanjit Biswas: Sure. So we launched a number of new products at the customer conference earlier this year, and I think it took a few months for customers to trial them out, see how they worked. And it's been great to see the contribution early on from these new products. So that 20% up from 8%, I think, reflects growth across a number of different products. So it was no single product but really kind of balanced across a number of different products. Aleksandr Zukin: Perfect. And then, Dom, maybe for you. It's a little bit -- it's great and rare to see sequential growth in net new ARR for you guys in a Q3, particularly given some of the mechanics around some deals pushing out from 1Q to 2Q. So maybe can you just highlight like what drove that strength? Maybe comment on the First Student deal. Was that more impactful in Q2 or Q3? And anything else that we should keep in mind? Dominic Phillips: Yes. Thanks. So yes, so Q2, obviously, we talked about this 3 months ago, and we had the benefit of some of the deals from Q1 that slipped into Q2, and we closed those in May at the beginning of the quarter. And so we called that out last quarter. In terms of First Student, that was a deal that we signed in Q2. It's going to be a phased rollout. So the ARR will be added over time. That's very common for our large deals to do these phased rollouts. We actually added more ARR from that deal in Q2 than we did in Q3, so it really wasn't much of a contributor to this quarter. Q3 was really driven by things like the record number of large customers that we added, both $100,000 and $1 million plus, we tied the quarterly record again for $1 million-plus net new ACV transactions, strength across emerging products, strength in international. It was just -- it was really strong across the board kind of firing on all cylinders versus kind of one thing that drove the second consecutive quarter of accelerating growth. Aleksandr Zukin: Congrats, guys. Mike Chang: The next question comes from Keith Weiss with Morgan Stanley, followed by Matt Bullock with BofA. Keith Weiss: Congratulations on a really solid quarter. I wanted to dig in on sort of the 20% from emerging products. It seems like with the broader product portfolio that you guys have put out there, now you're seeing traction across multiple products. You're seeing those multiproduct deals really hit. Any sense you could give us on kind of the latent opportunity, if you will, within the customer base? Like how expansive could these products be within existing customers? How much further can you go in terms of growing existing customers with the expanded product portfolio? Dominic Phillips: Yes. I mean most of our net new ACV or slightly more of it generally comes from expansions to existing customers, even within our core products, and so that's definitely also the case in these emerging products. We're really just scratching the surface. Again, these are products in totality that have been rolled out going back to the beginning of last year, but they're really allowing us to land larger in some of these customers. We called out that 9 of the top 10 net new ACV deals included 3 or more products. So that includes things outside of our core products. And that just wasn't the case before the beginning of last year, and so we're really seeing good momentum from the emerging products. And Sanjit said, it's not any one given product. We're really seeing good uptake across the board. Keith Weiss: Got it. I mean is there any kind of rule of thumb that you could kind of point us to if your average like $100,000-plus customers paying you $350,000 per year, today, if they fully buy in across the solution portfolio? Can that go to $700,000? Like is it like a 2x, 3x uplift potential from the expanded solution portfolio? Dominic Phillips: I don't think there's like a really good rule of thumb for that. Some customers may have more assets out in the field or more frontline workers than they do commercial vehicles. Some of these deals are more of the net new ACV is coming from the emerging products than the kind of the core products. And so there's not really one rule of thumb, but it's just giving us more opportunities to land broader, again, really thinking about Samsara as a system of record and providing more kind of full-scale ROI for the customers. Keith Weiss: Got it. And then maybe just as a follow-up. Taking the combination of the first 2 questions that my colleagues asked. The last 2 quarters have been pretty remarkable in terms of the acceleration and the net new ARR growth. It sounds like it's a combination of like more products hitting into the existing accounts and large customer go-to-market motion hitting. Is that it? Like is it just like your initiatives are sort of compounding against each other to drive that? Or is there something else under the hood that's enabling you guys to see this type of acceleration in the net new? Dominic Phillips: Yes. I mean, yes, and if you go back to Q2 where we had accelerating net new ARR growth versus Q1, obviously, again, we had the benefit of the Q1 deals that slipped in and we talked about First Student with Alex' question, Q3 was just really strong across the board. Again, quarterly record number of large customers added, tying a quarterly record in terms of largest deals, strength across emerging products, strength in international. It was just -- it was really strong across the board kind of firing on all cylinders versus kind of one thing that drove the second consecutive quarter of accelerating growth. Mike Chang: The next question comes from Matt Bullock with BofA, followed by Matt Hedberg with RBC. Matthew Bullock: Excellent. I wanted to ask a quick follow-up to Alex' question to clarify some of the math I've done over here because I have to admit, looking at the initial stock reaction relative to that reported net new ARR number, I'm a little bit confused here. So even in our more aggressive upside model, $105 million in net new ARR was well above our estimate when you adjust for that approximately $5 million in incremental net new ARR tailwinds that you had in 2Q from the Liberation Day slippage. Am I correct in saying this will be the first sequential growth quarter in 3 years at about 5% plus or so when you do some of that math? Or do I have my numbers correct there? Dominic Phillips: Yes. I don't think we've like commented exactly on what the Q1 Liberation Day kind of impact was. We did say mid-single digits, and that is an amount that slipped out of Q1 and we landed in Q2. And so that definitely had an impact. I think if you look back over the last couple of years, even beyond that, Q3 has been a little bit below Q2. And so I think sequentially, that's one way to look at it. The other way is obviously just the overall net new ARR growth rate. It's not only is it the second consecutive quarter of accelerating. It's the highest net new ARR growth rate in the last 7 quarters. So again, not one thing to call out that really drove that strength. It was really across the board. Matthew Bullock: Awesome. And then a quick follow-up if I could. On the First Student deal, obviously, a huge amount of vehicles, 46,000. You're attaching video, telematics, commercial NAV, impressive deal. But over the long term, it looks to me, even when you underwrite conservative pricing assumptions, this could be $30 million, $40 million-plus ACV customer. Maybe just help us think about how deals of this magnitude typically roll out, right? Obviously, they're staged rollouts. But what percentage of those 46,000 you think can be deployed in the first 6 months to a year? Dominic Phillips: It really depends. It's customer by customer. I mean some customers can deploy a lot faster. There's a lot of change management, project management required internally at the customers to deploy these systems, and so it really is customer by customer in terms of how long they will get rolled up. But many customers of this size or our largest deals get phased out over several quarters. Mike Chang: The next question comes from Matt Hedberg with RBC, followed by Jim Fish with Piper Sandler. Matthew Hedberg: Great. I'll offer my congrats as well. I mean seeing this kind of growth at scale and GAAP profitability is elite to say the least. Sanjit, I wanted to ask about international, something that we've been -- and you have been focused on over the last several years, and it's great to see the progress there. I think you said Europe accelerated now for the second straight quarter. It's still early clearly from an international perspective, less penetrated in the U.S. If you were to sort of like look at a scorecard and say we think we're in the X inning of this journey, where are we? And as we think forward in the future, I mean, this feels like it could be a significant driver of total ACV growth. Just thoughts on kind of where we're at in this international journey. Sanjit Biswas: Yes. Matt, I would agree with you that we're early. For us, international has always been an exciting long-term opportunity. We talked about this on the prepared remarks. There are more assets. Basically, there's more physical operations out in Europe, Mexico and Canada than there are in the U.S., so more vehicle count and so on. That being said, they're earlier in their digitization journey, so they're maybe kind of earlier on how they're piloting these technologies, how they're implementing them. So we're kind of in the early innings is the way I would put it, and we're investing for the long term. We want to make sure we have a great product market fit. We're spending time out in the field with those customers. I referenced our local customer conferences. They've been awesome. So we're going to continue to invest there, but it really is against that long-term opportunity to digitize operations at a more global scale. Matthew Hedberg: Got it. And then on AI, you continue to roll out new products at your user conference. I'm just curious, like philosophically speaking, how do you think AI itself contributes to growth? Like is it additive to growth? And I guess, in the future, do you see pricing and packaging evolving when you continue to layer on more AI and GenAI features? Sanjit Biswas: Well, I think of AI as just being an incredible unlock for this customer value. So we have this data asset that we've been compounding that gives us a lot of visibility into the physical operations, but it's way more data than any team of people can look at. And so I talked about automations, for example, being able to scale the impact of this product using AI, that's powered by LLMs, GenAI and a bunch of the newer technologies you've been hearing about. So again, I think of it as an unlock of what's going to make it possible for these industries to digitize in a practical way without having to add a ton of head count, get value from that data. So that both improves our ability to deliver the existing products that enhances them, and it creates a possibility for some of the newer products that we launched beyond. So it really is sort of being applied across the board on both existing and new products. Mike Chang: The next question comes from Jim Fish with Piper Sandler, followed by Kirk Materne with Evercore. James Fish: Nice quarter. Maybe just going back to the school bus example. I mean, it's the second big school bus provider win. I guess, is there a way to think about how big of a vertical this is today? I assume very small, but really the crux of my question is how big of an opportunity in the U.S. alone it is as we think about your TAM. Sanjit Biswas: I don't have an exact number for you in terms of how big the school bus vertical is off the top of my head. One of the exciting things we've seen is once these industry verticals start to open up, they really go. So we've seen this with construction as we've gotten adoption. We've seen it in segments like building materials. And now with student transportation, I think landing the largest -- landing another top 5, we're really starting to see the entire industry say, "Hey, this is a technology we need to implement because it massively improves safety. It helps us be competitive". So we look forward to seeing more growth in the student transport industry, but unfortunately, I don't have a specific number off the top of my head for you. James Fish: All good. And just on the newer products, I mean, Asset Tags ended -- ending ARR growing over 400%. I assume that's a reacceleration, albeit off of a smaller base. Is there a way to think about how that sizing now compares to that $10 million ARR given at Beyond? And more on the emerging products, how commercial navigation is going at this point? Dominic Phillips: We'll give Asset Tag kind of ARR as we cross like important milestones, but you're right. I mean it was very strong growth. And I think one thing that's really helping to open that up is that we're really expanding what Asset Tags can do. We rolled out the kind of first version of it last year. And then this year, we rolled out the tank level monitoring aspects in addition to kind of the Bluetooth location. And so we'll continue to add more and more products on to the Samsara network, and that's just another kind of extension, which has allowed us to -- again, to win our largest deal, Asset Tags deal ever in Q3. Mike Chang: Great. The next question comes from Kirk Materne with Evercore, followed by Dylan Becker with William Blair. S. Kirk Materne: Sanjit, I want to follow up a little bit on Matt's question earlier about AI. And I was kind of curious, when your customers are thinking about their budgets next year, are they thinking about apportioning part of that towards AI? And do you guys get the benefit from that as a platform that obviously sort of future proofs them when it comes to that technology longer term? I'm just kind of curious if the discussions with bigger customers are actually benefiting from the fact that you're a platform that sort of will embed AI for them over time. Sanjit Biswas: Yes. I think, first of all, the budget we sell into is the operations budget. That tends to be the largest operational budget in these companies, and they are really thinking about how do they get value. Where is the ROI going to come from? AI is, I think, intuitive to a lot of buyers now. This is going to be an unlock, but ultimately, they want to see savings when it comes to safety and efficiency and kind of the core tenets of their operation. So I do think it's a nice tailwind for us in some of these deals. It helps us articulate why it is possible now to see this kind of value unlock. But I wouldn't say that they're pulling from a discrete AI budget within their own budgets. S. Kirk Materne: Okay. That's helpful. And then, Don, just a follow-up for you. Obviously, international, another nice quarter. What's sort of the thought process on expanding go-to-market reach in those territories as you go into next year? And kind of how should we think about that from an investment perspective for you all? Dominic Phillips: I think it will be very similar to what we've done over the last couple of years. We tend to invest a little bit more internationally. Again, as Sanjit alluded to in his prepared remarks, there are more physical operations assets and frontline workers in Europe and Canada and Mexico, and those markets are even less penetrated than what we see in the U.S. So we still see a lot of white space opportunity in our core market in the U.S., but these international markets are going to be -- continue to be more important as we think medium and long term and the durability of the growth. And so we will be making more investments in terms of our R&D go-to-market resources in international going into FY '27. Mike Chang: The next question comes from Dylan Becker of William Blair, followed by Alex Sklar with Raymond James. Dylan Becker: Appreciate it. Maybe, Sanjit, just starting with you on the public sector strength. I think it's 100% growth in kind of new ACV or net new ARR there. I know we've got a dedicated team in place, and we've kind of worked through the FedRAMP process. But maybe if you could kind of double click on what that continues to unlock, how we should think about kind of what the public sector opportunity looks like and how we would expect sustained momentum from this segment in particular. Sanjit Biswas: Sure. So one thing that's worth noting is in the public sector for physical operations, most of the work is actually done on the state and local level. So that's where the physical operations are taking place, whether it's maintaining roadways or sort of all the other work that happens. So we're excited to have wins like the City of Los Angeles and Chicago. I think state of New York was another big one. And what's exciting about that is that these state and local customers, they're not competitive with one another. In other words, they share notes. They're happy to share win stories of how they're getting value, and so that's been a big part of the unlock, is kind of growing momentum that this is now possible. You can fundamentally improve safety. You can improve efficiency of asset use. And so it's not about a Fed opportunity as much as it is SLED in our business at least. Dylan Becker: Perfect. Okay. No, that's very helpful. And then maybe for Dom on the enterprise traction piece. Obviously, another very strong quarter with $1 million and $100,000 customers, continues to accelerate and become an increasingly larger share of the overall mix. I guess, how should we think about kind of sustainability? Obviously, the opportunity is significantly large here but within that enterprise cohort and maybe how that helps drive conviction in your guys' outlook or confidence in the durability of the growth framework. Dominic Phillips: Yes. Yes, this is enterprise or strategic areas that we've been investing in for several years, again, from an R&D perspective to make sure that our platform is scalable and secure and that we have more than 350 technology integrations and then on the go-to-market side, making sure that we have the right kind of strategic AE resources but also the kind of the front-end sales engineers and customer successes required to really service these really large enterprises. So a lot of investment, a lot of -- is driving a lot of the momentum. And we feel really good about the size of the opportunity and this continuing to be a big driver of growth for us over time. I will say that, obviously, as I kind of mentioned in my prepared remarks, these larger deals, they're a little bit longer. They're a little bit less predictable on a kind of quarter-to-quarter basis. And so the kind of the timing of when they close could be a little bit different than more of our mid-market customers that just have a lot more predictability in terms of what the sales cycle links. So I think if you're looking at the growth rate over an extended period of time, maybe multiple quarters over a year, we feel really good about the durability. There may be some more variability on a quarter-to-quarter basis. Mike Chang: The next question comes from Alex Sklar with Raymond James, followed by Derrick Wood with TD Cowen. Alex? Okay. Let's ask... Alexander Sklar: Sorry. Sanjit, just first one for you, following up on Dylan's question. Just given some of the success verticalizing that public sector sales force, has that changed your thought process at all on go to market for some of your other end markets? Sanjit Biswas: Well, in general, we are always relooking at what's the best way to sell to these different kinds of customer segments. Nothing specific to announce at this point, but we've been happy with the public sector team. It is quite a different buyer persona and industry vertical than some of the others we sell into. But every year, as we go through the planning process, we have a number of different debates and discussions about how to organize. Alexander Sklar: Okay. Great. And Dominic, just a follow-up for you. Just given the traction on newer products we've talked about, any change to how you're thinking about the expansion motion as part of that 115% NRR framework? Is that something we could see step up as you continue to add products to the overall platform? Dominic Phillips: Our business has been very consistent over the last several years and very balanced in terms of roughly half of the business -- roughly half of the new bookings in a given period coming from new logos and the other roughly 50% coming from expansions. I think there's clearly a lot of expansion opportunity in front of us with some of these larger customers and phased rollouts and all of the newer products that we're releasing, but there's still a lot of opportunity on the new logo side as well. And so I think I would expect it to be pretty balanced going forward, but again, on the expansion side, still a lot of opportunity to grow within the existing customers we've landed. Mike Chang: The next question comes from Derrick Wood with TD Cowen, followed by Mark Schappel with Loop Capital. James Wood: Congrats on my end. Sanjit, the -- I just wanted to ask about the new tariffs that went into effect in November on foreign trucks and truck parts. Just are you seeing this shape customer demand one way or the other? Like does this drive more companies to turn to Samsara to extend lifespan of assets owned? Or just curious how this may have had any impact on end market behavior. Sanjit Biswas: Yes. So Derrick, I was out on the road a lot last quarter, and I asked many of our customers what they thought about the tariffs, how it impact their operations. And really, they didn't think it was going to have much of a change in how they were behaving. You mentioned extending asset life spans. That is something we've seen interest in really for the last several years, which is these trucks have been getting more and more expensive over time. But they're also possible to run for a few more years if you maintain them well. So we launched Connected Maintenance, for example. We have a lot of fault code insights and other AI that we're applying to helping extend asset lifespan. So that is, I think, more of an evergreen thing that we're seeing in the customer base, where they're always trying to figure out can we run these assets a little bit longer by maintaining them in a smarter way but not linked to the recent tariff needs at all. James Wood: Got it. Dom, in your prepared remarks, you called out selling into areas like construction, field services, energy, utilities. These are all impacted by physical AI infrastructure build-out. So could you double click on what you're seeing in that arena, how all the investments in CapEx on AI data centers may be impacting demand from those verticals and how you see that playing out over the next couple of years? Dominic Phillips: Yes, definitely. I mean we called out that construction was our largest industry in terms of net new ACV mix for the ninth consecutive quarter and it's obviously a direct beneficiary of the AI build-out. I think even more broadly, though, just the digital transformation for these physical operations businesses in all these industries really transcends what's going on in kind of in the broader economy. And so I think both of those are contributing to continued success in the industries you mentioned. Mike Chang: Our last question today comes from Mark Schappel with Loop Capital. Mark Schappel: Sanjit, could you share more detail on what you're currently seeing in the telematics market, including any evidence of an accelerating replacement cycle? And then also, too, along those lines, is it fair to assume that you're still seeing high win rates versus some of the legacy providers there? Sanjit Biswas: Yes, absolutely. So I would say telematics, it's part of the market that's been around for some time, really since probably the late '90s, early 2000s. So we are seeing sort of aging incumbents that haven't been able to keep up. Customers are kind of looking for other solutions, and we're very well positioned for that. So that's really this kind of modernization going on. And then more broadly, safety is driving a lot of these new expansions and then new wins. So that's an area where we've seen a lot of strength. And the legacy telematics vendors that have been truly point solutions, they've either partnered for that or have implemented kind of basic safety products. So what we're seeing in the market is people are looking for a broader platform, something that's modern, something where they can really put multiple applications up and get a system of record going. That's different than the kind of telematics point solutions that were common about 20 years ago. Mike Chang: This concludes the question-and-answer portion. Thank you all for attending our Q3 fiscal year 2026 earnings call. Before I let you go, I have a few short announcements. We will be attending the Raymond James TMT and Consumer Conference in New York on December 9 and the FBN Virtual Technology Conference on December 12. We'll also be hosting the Piper Sandler Bus Tour on December 9, the Rothschild Bus Tour on December 9, the Evercore Bus Tour on January 5, the Bank of America Bus Tour on January 5 and the Jefferies Bus Tour on January 6. We hope to see you at one of these events. That's it for today's meeting. If you have any follow-up questions, you can e-mail us at ir@samsara.com. Bye, everyone.
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