Financial Data and Key Metrics Changes - The company reported revenue of $229 million for Q1, representing a 23% year-over-year growth [26] - Total Annual Recurring Revenue (ARR) grew 24% to $948 million [27] - The gross margin maintained at 79%, with an operating margin improvement to negative 2% [29] - Free cash flow margin reached a record 20%, with a trailing twelve-month basis expansion of five percentage points [29][35] Business Line Data and Key Metrics Changes - Revenue from international markets grew 27%, accounting for 38% of total quarterly revenue [27] - Customers with ARR of $100,000 or more increased by 22% to 1,459 [28] - The data solutions segment surpassed $100 million in ARR during Q1 [10] Market Data and Key Metrics Changes - The company observed elongated sales cycles due to macroeconomic uncertainty, impacting Q1 net new ARR [19] - Despite the challenges, win rates remained strong, and there were no project cancellations [19][52] Company Strategy and Development Direction - The company is focusing on a platform sales strategy rather than a product-centric approach, aiming to enhance flexibility and customer adoption [23][75] - Recent innovations include the unified cloud security suite and advancements in AI capabilities, which are expected to drive future growth [9][34] - The company achieved FedRAMP high authorization for several products, enhancing its competitive position in the public sector [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted improved trends in May, with expectations for year-over-year net new ARR growth in Q2 to exceed Q1 [41][52] - The company remains cautious about macroeconomic conditions but is optimistic about the strength of its pipeline and demand [19][53] - The outlook for Q2 revenue is approximately $242 million, reflecting a 22% growth [31] Other Important Information - The company announced a $200 million open-ended share repurchase authorization, reflecting confidence in its long-term trajectory [36] - The company is committed to investing in AI-driven innovations while maintaining operational efficiency [33][84] Q&A Session Summary Question: Can you talk about incremental ARR in the quarter? - Management indicated that improved trends were observed in May and expects year-over-year net ARR growth in Q2 to improve relative to Q1, attributing Q1 challenges to macro volatility rather than elevated churn [41][43] Question: Can you clarify guidance assumptions? - Management acknowledged improved trends in May but is being cautious about potential external disruptions, which influenced the slight decrease in revenue guidance [48] Question: What are customers saying about slip deals? - Management noted that longer sales cycles were observed, particularly in April, but there have been no deal cancellations, and demand remains strong [51][52] Question: How is the productivity and bundle sale progressing? - Management highlighted that the breadth of the platform is significant, and efforts are being made to make it more flexible for customers [57] Question: What is the outlook for the SIEM market? - Management noted increasing interest in cloud-native SIEM solutions and the need for real-time threat addressing, which legacy systems struggle to provide [63] Question: What are the hiring plans for fiscal 2026? - Management indicated a focus on R&D hiring, with adjustments made based on business needs [105] Question: What is the impact of the share repurchase program on M&A? - Management stated that the strong liquidity position allows for opportunistic share repurchases while still having ample cash for potential M&A [93]

Financial Data and Key Metrics Changes - The company reported revenue of $229 million for Q1 2026, representing a 23% year-over-year growth [25] - Total Annual Recurring Revenue (ARR) grew 24% to $948 million [26] - The gross margin maintained at 79%, with an operating margin improvement to negative 2% [28] - Free cash flow margin reached a record 20% for the quarter, with cash and investments increasing to $1.2 billion [35][36] Business Line Data and Key Metrics Changes - The data solutions segment surpassed $100 million in ARR during Q1 [9] - The attach rate for AI solutions exceeded 25% across subscriptions sold in the quarter, indicating strong customer adoption [8][85] - Customers with ARR of $100,000 or more grew 22% to 1,459 [27] Market Data and Key Metrics Changes - Revenue from international markets grew 27%, accounting for 38% of total quarterly revenue [26] - Remaining performance obligations increased by 33% to $1.2 billion, indicating strong future revenue visibility [27] Company Strategy and Development Direction - The company is focusing on a platform sales strategy rather than a product-centric approach, aiming to enhance customer engagement and adoption [21][72] - Recent innovations include the unified cloud security suite and advancements in AI capabilities, which are expected to drive future growth [8][20] - The company aims to simplify security through AI, positioning itself as a leader in the evolving cybersecurity landscape [19][20] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic uncertainty impacted Q1 net new ARR, but trends improved in May, leading to expectations of better performance in Q2 [18][42] - The company remains confident in its growth trajectory, expecting revenue of approximately $242 million for Q2, reflecting a 22% growth [30] - Management emphasized the importance of operational discipline and efficiency to navigate market challenges while continuing to invest in innovation [32][81] Other Important Information - The company achieved FedRAMP high authorization for several products, enhancing its competitive position in the public sector [12][13] - A $200 million open-ended share repurchase authorization was announced, reflecting confidence in the company's long-term prospects [36] Q&A Session Summary Question: Can you discuss the incremental ARR in the quarter? - Management indicated that improved trends were observed in May and expects year-over-year net ARR growth in Q2 to improve relative to Q1, attributing Q1 challenges to slip deals rather than elevated churn [40][41] Question: What are the guidance assumptions for the year? - Management acknowledged that the guidance reflects underlying new business growth and noted improved trends in May, while also being cautious about potential external disruptions [45][46] Question: What impact did the macro environment have on existing versus new customers? - Management clarified that the macro dynamics were more pronounced with new logos, while existing customer upsell and cross-sell remained strong [97] Question: How is the company approaching hiring plans for fiscal 2026? - Management stated that hiring is primarily focused on R&D, with adjustments made based on market needs and growth areas [102] Question: What is the outlook for the federal side of the business? - Management expressed optimism about growth opportunities in the federal sector, despite longer sales cycles and evolving procurement processes [107]

Revenue Performance - Revenue for the three months ended April 30, 2025, was $229.0 million, representing a year-over-year growth of 23% from $186.4 million in the same period of 2024[102]. - Revenue for the three months ended April 30, 2025, was $229.0 million, a 23% increase from $186.4 million in the same period of 2024, driven by new customer sales and additional licenses to existing customers[134]. - Annualized recurring revenue (ARR) grew 24% year-over-year to $948.1 million as of April 30, 2025, driven by new customer additions and existing customer adoption of adjacent platform solutions[113]. - The number of customers with ARR of $100,000 or more increased by 22% year-over-year to 1,459 as of April 30, 2025, up from 1,193 in 2024[115]. - Revenue outside of the U.S. represented 38% of total revenue for the three months ended April 30, 2025, compared to 37% in the same period of 2024, indicating a strong global presence[101]. Operating Loss and Expenses - Non-GAAP operating loss for the three months ended April 30, 2025, was $3.9 million, an improvement from a loss of $11.1 million in the same period of 2024[110]. - The company reported a GAAP operating loss of $87.5 million for the three months ended April 30, 2025, compared to a loss of $80.6 million in 2024[111]. - The net loss for the three months ended April 30, 2025, was $208.2 million, compared to a net loss of $70.1 million in the same period of 2024[134]. - Research and development expenses increased by $13.9 million to $72.3 million, primarily due to a $9.8 million rise in personnel-related costs and a $1.6 million increase in cloud hosting expenses[138]. - Sales and marketing expenses rose by $18.1 million to $133.9 million, mainly due to a $15.9 million increase in personnel-related expenses[139]. - General and administrative expenses increased by $6.0 million to $48.7 million, driven by a $5.2 million rise in personnel-related costs and a $2.2 million increase in consulting expenses[140]. - Restructuring charges amounted to $5.2 million, reflecting costs associated with the restructuring plan executed in March 2025[141]. Cash Flow and Financing - Cash provided by operating activities for the three months ended April 30, 2025, was $52.3 million, compared to $42.0 million for the same period in 2024[150][156]. - Cash used in investing activities during the three months ended April 30, 2025, was $65.6 million, primarily due to $167.3 million in investment purchases[157]. - Cash provided by financing activities for the three months ended April 30, 2025, was $12.3 million, entirely from the exercise of employee stock options[159]. - The company has authorized a $200.0 million share repurchase program, with no shares repurchased as of May 28, 2025[149][150]. - The company holds cash, cash equivalents, and investments totaling $1.2 billion as of April 30, 2025, which is expected to support working capital for at least the next 12 months[146][169]. - The company may seek additional equity or debt financing in the future, depending on various factors including revenue growth and macroeconomic conditions[147]. Tax and Interest - The provision for income taxes surged to $133.5 million, primarily due to an accrual of $136.0 million for an unrecognized tax benefit related to the APA matter[143]. - The company recorded a tax expense of $136.0 million during the three months ended April 30, 2025, related to uncertain tax positions in the context of APA negotiations[145][163]. - Interest income, net increased by $0.2 million to $12.3 million, attributed to higher income from investments in marketable securities[142]. Market Conditions and Strategy - The company experienced a decline in usage and consumption patterns from certain larger enterprise customers due to macroeconomic conditions, leading to longer sales cycles and deal downsizing[103]. - The company intends to monitor global macroeconomic conditions closely and may take financial or operational actions in response to adverse impacts on its business[104]. - The company’s go-to-market strategy focuses on acquiring new customers and expanding usage among existing customers through a combination of direct sales and channel partnerships[100]. - The company’s distributed AI models provide protection even when devices are not connected to the cloud, enhancing the platform's effectiveness[96]. Future Expectations - The company expects research and development expenses to increase in absolute dollars while decreasing as a percentage of total revenue over time[123]. - As of April 30, 2025, the company reported an accumulated deficit of $1.8 billion and expects operating losses to continue for the foreseeable future[145]. - A hypothetical 100 basis point change in interest rates would result in an $8.4 million change in the fair market value of the company's investment portfolio[169]. - A hypothetical 10% adverse change in the U.S. dollar against other currencies would have increased operating loss by approximately $8.1 million for the three months ended April 30, 2025[170].

Revenue and Growth - Total revenue increased 23% year-over-year to $229.0 million, compared to $186.4 million[4] - Annualized recurring revenue (ARR) rose 24% year-over-year to $948.1 million as of April 30, 2025[4] - Customers with ARR of $100,000 or more grew 22% to 1,459 as of April 30, 2025[4] - Revenue for the three months ended April 30, 2025, was $229,029,000, representing a 22.8% increase from $186,355,000 in the same period of 2024[36] Profitability and Margins - GAAP gross margin improved to 75%, up from 73%[4] - Non-GAAP gross margin guidance for full FY2026 is between 78.5% and 79.5%[6] - Free cash flow margin increased to 20%, up from 18% year-over-year[4] - Non-GAAP operating margin guidance for full FY2026 is projected at 3% to 4%[6] - GAAP net loss margin was reported at (91)%, while the non-GAAP net income margin was 3%[42] - Operating cash flow margin remained stable at 23% for both periods[45] Expenses and Losses - Net loss for the three months ended April 30, 2025, was $208,193,000, compared to a net loss of $70,105,000 in the prior year, resulting in a net loss per share of $0.63[36][39] - Research and development expenses for the three months ended April 30, 2025, were $72,253,000, up from $58,321,000 in 2024[36][39] - The company reported stock-based compensation expense of $68,655,000 for the three months ended April 30, 2025, compared to $58,553,000 in the prior year[36][41] - The company reported a stock-based compensation expense contributing 30% to the net loss margin[42] - Non-GAAP operating loss for the three months ended April 30, 2025, was $3,927,000, compared to a non-GAAP operating loss of $11,081,000 in 2024[41] Cash Flow and Assets - Cash provided by operating activities was $52,274,000 for the three months ended April 30, 2025, compared to $42,003,000 in the same period of 2024[38] - GAAP net cash provided by operating activities increased to $52,274,000 from $42,003,000 year-over-year[45] - Free cash flow for the period was $45,444,000, up from $33,756,000 in the previous year, reflecting a free cash flow margin of 20%[45] - Total current assets decreased to $1,030,598,000 as of April 30, 2025, from $1,069,722,000 as of January 31, 2025[34] - Total assets decreased to $2,383,951,000 as of April 30, 2025, from $2,406,625,000 as of January 31, 2025[34] - Net cash used in investing activities decreased to $(65,592,000) from $(106,264,000) year-over-year[45] Liabilities and Shareholder Actions - Total liabilities increased to $837,409,000 as of April 30, 2025, compared to $737,378,000 as of January 31, 2025[34] - The company announced a $200.0 million share repurchase program, reflecting confidence in long-term growth[3] - The number of GAAP basic and diluted shares increased to 327,976,349 from 309,547,693[42] Future Guidance - The company expects Q2 FY2026 revenue guidance of $242 million[6]

Core Viewpoint - SentinelOne, an AI cybersecurity company, has seen its stock decline significantly despite its growth potential and advanced technology, suggesting it may be undervalued in the current market [1][6][10]. Company Overview - SentinelOne went public in mid-2021 and has a proprietary Singularity Platform that uses AI for autonomous threat detection and response [4][5]. - The company has received industry recognition and has secured contracts with multiple Fortune 10 companies and hundreds in the Global 2000 [5]. Financial Performance - The stock's market cap peaked at over $20 billion shortly after its IPO, with revenue of just over $200 million that year [5]. - The price-to-sales (P/S) ratio has dropped from over 105 to 7.6, indicating a significant shift in valuation [8]. - SentinelOne's revenue is projected to grow from $821 million in fiscal year 2025 to $1.0 billion this year and $1.2 billion next year, reflecting growth rates of 22% and 20% respectively [14]. Market Position - Compared to competitors like CrowdStrike and Palo Alto Networks, which have higher P/S ratios of 28.7 and nearly 15 respectively, SentinelOne appears undervalued [10]. - Despite lower profitability compared to its peers, SentinelOne has shown improvement in profit margins and has been cash flow-positive for the past four quarters [12]. Future Outlook - If SentinelOne continues its growth trajectory, it could potentially double its market cap over the next three years, assuming a P/S ratio of 9 to 10 based on projected revenue of approximately $1.4 billion [15]. - The cybersecurity industry presents ample opportunities, and SentinelOne's competitive capabilities position it well for future growth [16].

Core Viewpoint - SentinelOne is positioned for stable growth in fiscal 2026, with expected revenue of $228 million for the first quarter, reflecting a 22% year-over-year increase, despite some near-term challenges related to the retirement of a legacy product [5][12][19]. Financial Performance - Fiscal 2025 ended strongly for SentinelOne, with Q4 revenue rising 29% year-over-year to $225.5 million, surpassing expectations [1][2]. - The company achieved a net new Annual Recurring Revenue (ARR) of $60 million, bringing total ARR to $920 million, a 27% increase year-over-year [2]. - Gross margin for Q4 was robust, and operating margin exceeded guidance by over 400 basis points due to effective cost management [2][13]. Earnings Estimates - The Zacks Consensus Estimate for Q1 fiscal 2026 EPS remains at 2 cents per share, with revenue expectations set at $228 million, indicating a 22.4% year-over-year growth [5][12]. - For fiscal 2026, revenue growth is projected at 22.7%, with a significant 280% year-over-year improvement in the bottom line anticipated [6][7]. Market Position and Strategy - SentinelOne is leveraging AI-driven solutions, with over 300 deals signed in the last quarter, indicating strong market traction [11][20]. - More than 40% of large enterprise customers are now utilizing three or more modules of the Singularity platform, showcasing effective cross-selling and customer engagement [11][20]. Valuation and Stock Performance - The company's stock has underperformed compared to industry peers, with a 2.8% decline over the past three months, while the broader industry saw an 8.3% increase [14][15]. - Currently, SentinelOne trades at a forward 12-month price-to-sales (P/S) ratio of 6.04X, slightly above the sector average of 6.12X, but below its three-year average [18]. Long-term Outlook - Despite short-term headwinds, the long-term investment case for SentinelOne remains strong, driven by sustained platform adoption, AI differentiation, and improving margins [21][22]. - The company is on track to exceed $1 billion in revenues and ARR this fiscal year, supported by innovation and operational discipline [21][22].

Core Viewpoint - SentinelOne's shares have increased by 25% over the past month, outperforming both the Zacks Security industry and the broader Zacks Computer and Technology sector, which saw returns of 19.4% and 22.8% respectively, driven by its strong AI-powered portfolio and expanding clientele despite competition [1] Company Performance - SentinelOne's stock has underperformed compared to competitors like Okta, Broadcom, and Microsoft, which appreciated by 37.7%, 37.5%, and 26.5% respectively over the same period [4] - The company has provided positive guidance for Q1 fiscal 2026, expecting revenues around $228 million, indicating a 22% year-over-year growth, and for the entire fiscal 2026, revenues are expected to be between $1.007 billion and $1.012 billion, implying a 23% growth year-over-year [10][11] Product and Innovation - SentinelOne's Singularity platform offers a comprehensive AI-native security solution across multiple levels, including endpoint, cloud, identity, and data, through a single interface [3] - The Purple AI feature enhances investigation, real-time threat detection, and automated response, significantly reducing response times for enterprises [3] - The company has integrated its services with major platform solution providers like Palo Alto Networks, Fortinet, Okta, and Microsoft, enhancing security workflows for end users [6] Market Expansion - SentinelOne has established a strong partner base, including industry leaders like Alphabet, Lenovo, and Amazon Web Services (AWS), which aids in market reach [5] - In Q4 2025, 12+ new large Managed Security Service Providers adopted SentinelOne's AI SIEM, CNAPP, and Purple AI modules, contributing to recurring revenue growth [7] - The company received FedRAMP High Authorization for its Purple AI and other solutions, allowing it to sell services to federal agencies and critical infrastructure organizations, which is expected to drive top-line growth [9] Customer Growth - By the end of the previous quarter, SentinelOne had over 14,000 direct customers, with a 25% increase in customers having Annual Recurring Revenue (ARR) exceeding $100,000, totaling 1,411 such customers by January 2025 [7]

Core Viewpoint - Cybersecurity providers are expected to remain resilient amid market volatility caused by tariffs, as cybercriminal activities continue unabated. Investors are encouraged to consider four leading cybersecurity stocks this month [1]. Group 1: Palo Alto Networks - Palo Alto Networks is transitioning from a next-generation firewall provider to a comprehensive cybersecurity platform, implementing a "platformization" strategy to consolidate customers onto three main platforms [3]. - The strategy has resulted in 1,150 of its top 5,000 customers adopting one of its platforms, with a target of 2,500 to 3,500 by fiscal year 2030. Growth is also seen in its Cortex threat detection and response solution and Prisma Cloud [4]. - Although the platformization strategy temporarily slowed growth, it is expected to yield long-term benefits for investors [5]. Group 2: CrowdStrike - CrowdStrike is positioned to benefit from companies consolidating their cybersecurity needs onto a single platform, being a leader in endpoint security [6]. - The company offers a comprehensive suite of cybersecurity solutions, with 67% of customers deploying five or more modules and 21% using eight or more [8]. - With the impact of a previous IT outage behind it, CrowdStrike is expected to see growth accelerate, making it an attractive investment opportunity [9]. Group 3: Zscaler - Zscaler is a leader in zero-trust security, emphasizing continuous verification of users and devices for secure access [10]. - The company has successfully upsold its zero-trust systems and reported a 40% increase in annual contract value for its data security products, with overall revenue growing 23% year over year [12]. - Zscaler's strong net dollar retention rate of 115% indicates robust growth within its existing customer base, positioning it well for future success [12]. Group 4: SentinelOne - SentinelOne is a rapidly growing endpoint cybersecurity company with a low forward price-to-sales multiple of 6.6, despite achieving 29% revenue growth last quarter [13]. - The partnership with Lenovo, the world's largest enterprise PC vendor, to ship computers with SentinelOne's Singularity Platform is a significant opportunity [14]. - The company is also successfully upselling its Purple AI, which enhances security operations through hyper-automation, indicating a promising future [15][16].

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on SentinelOne (S), and emphasizes the importance of using these recommendations in conjunction with other analytical tools for making investment decisions [1][5]. Brokerage Recommendations - SentinelOne has an average brokerage recommendation (ABR) of 1.52, indicating a consensus between Strong Buy and Buy, based on recommendations from 33 brokerage firms [2]. - Out of the 33 recommendations, 24 are classified as Strong Buy, accounting for 72.7%, while one is classified as Buy, making up 3% of the total [2]. Limitations of Brokerage Recommendations - Solely relying on brokerage recommendations may not be advisable, as studies indicate they often fail to guide investors effectively towards stocks with high price appreciation potential [5]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell recommendations [6][10]. Comparison with Zacks Rank - The Zacks Rank, which classifies stocks from 1 (Strong Buy) to 5 (Strong Sell), is presented as a more reliable indicator of near-term price performance compared to ABR [8]. - Unlike ABR, which is based solely on brokerage recommendations, Zacks Rank incorporates earnings estimate revisions, showing a strong correlation with stock price movements [11]. - The Zacks Rank is updated more frequently, reflecting timely changes in analysts' earnings estimates, while ABR may not always be current [12]. Earnings Estimates for SentinelOne - The Zacks Consensus Estimate for SentinelOne has increased by 0.6% over the past month to $0.19, indicating growing optimism among analysts regarding the company's earnings prospects [13]. - This increase in consensus estimates, along with other factors, has resulted in a Zacks Rank of 2 (Buy) for SentinelOne, suggesting a positive outlook for the stock [14].

Core Viewpoint - SentinelOne's stock price has declined since the last buy recommendation on December 7, 2024, following the release of its third quarter fiscal year 2025 report, which showed weaker-than-expected full-year FY 2025 results [1] Group 1 - The company reported weaker-than-expected full-year FY 2025 results, leading to investor disappointment [1]