SentinelOne(S) - 2025 Q3 - Quarterly Report

Revenue Growth - Revenue for the three months ended October 31, 2024 was $210.6 million, representing a 28$164.2 million in the same period in 2023[143] - Revenue for the nine months ended October 31, 2024 was $595.9 million, representing a 33$447.0 million in the same period in 2023[143] - Revenue for the three months ended October 31, 2024, increased by $46.5 million (28$149.0 million (33%) for the nine months ended October 31, 2024, driven by sales to new customers and additional endpoints/modules to existing customers[193] Annualized Recurring Revenue (ARR) and Customer Growth - Annualized Recurring Revenue (ARR) grew 29% year-over-year to $859.7 million as of October 31, 2024, up from$663.9 million in 2023[156] - The number of customers with ARR of $100,000 or more grew 24$78.4 million, compared to $70.3 million in the same period in 2023[143] - Net loss for the nine months ended October 31, 2024 was$217.7 million, compared to $266.7 million in the same period in 2023[143] - Non-GAAP operating loss for the three months ended October 31, 2024 was$10.7 million, compared to $18.2 million in the same period in 2023[154] - Non-GAAP operating loss for the nine months ended October 31, 2024 was$28.1 million, compared to $102.4 million in the same period in 2023[154] Gross Margin and Cost of Revenue - Gross margin increased to 75$9.5 million (22%) for the three months ended October 31, 2024, primarily due to a $4.6 million increase in customer support costs, a$3.7 million increase in cloud hosting usage charges, and a $1.4 million increase in amortization of capitalized internal-use software[182] - Gross profit increased by$125.9 million (40%) with gross margin improving from 71% to 74%, driven by revenue growth outpacing cost of revenue growth[195][197] Research and Development Expenses - Research and development expenses increased by $18.1 million (35$13.5 million increase in personnel-related expenses, including $7.2 million in stock-based compensation, and a$1.3 million increase in cloud hosting expenses[184] - Research and development expenses increased by $30.6 million (19$15.2 million in stock-based compensation, and increased cloud hosting expenses[198] - The company expects research and development expenses to increase in absolute dollars but decrease as a percentage of total revenue over time, although fluctuations may occur due to timing of expenses[168] Sales and Marketing Expenses - Sales and marketing expenses increased by $25.5 million (26$14.9 million increase in personnel-related expenses, including $4.5 million in stock-based compensation, and an$8.4 million increase in marketing-related expenses[184] - Sales and marketing expenses increased by $63.5 million (21$15.2 million in stock-based compensation, and increased marketing and sales-related expenses[199] - The company expects sales and marketing expenses to increase in absolute dollars but decrease as a percentage of revenue over time as it continues to invest in market penetration and global customer base expansion[171] General and Administrative Expenses - General and administrative expenses increased by $1.1 million (2$2.1 million increase in stock-based compensation, partially offset by a $2.2 million decrease in litigation expenses[185] - The company expects general and administrative expenses to increase in absolute dollars but decrease as a percentage of revenue over time as it continues to grow its business and incur additional public company operating costs[173] Cash Flow and Liquidity - Cash provided by operating activities was$37.1 million for the nine months ended October 31, 2024, compared to a $62.2 million cash used in the prior year period[210] - The company's principal source of liquidity was$1.1 billion in cash, cash equivalents, and investments as of October 31, 2024, expected to support operations for at least the next 12 months[207] - Operating cash flow for the nine months ended October 31, 2023 was a net use of $62.2 million, driven by a net loss of$266.7 million and $6.7 million used by changes in operating assets and liabilities, partially offset by$211.2 million in non-cash adjustments[215] - As of October 31, 2024, the company held $1.1 billion in cash, cash equivalents, and investments, with$69.2 million in restricted cash primarily for acquisition-related liabilities[226] Investing Activities - Investing activities used $85.9 million in cash for the nine months ended October 31, 2024, including$597.6 million in investment purchases, $61.6 million for acquisitions of PingSafe and Stride, and$19.8 million in capitalized software costs, partially offset by $594.9 million in investment sales and maturities[216] - Investing activities provided$27.6 million in cash for the nine months ended October 31, 2023, primarily from $504.3 million in investment sales and maturities, partially offset by$462.5 million in investment purchases[217] Financing Activities - Financing activities provided $31.7 million in cash for the nine months ended October 31, 2024, primarily from$22.9 million in employee stock option exercises and $8.8 million from ESPP stock issuance[218] - Financing activities provided$23.8 million in cash for the nine months ended October 31, 2023, consisting of $17.4 million from employee stock option exercises and$6.4 million from ESPP stock issuance[219] International Operations and Currency Risk - Revenue outside of the U.S. represented 37% for the three months ended October 31, 2024 and 2023[142] - The company had approximately 11% of its personnel in Israel as of October 31, 2024, and is monitoring the impact of the Middle East conflict on its business[147] - The company's revenue is not subject to foreign currency risk as sales contracts are primarily denominated in U.S. dollars, though operating expenses outside the U.S. are subject to exchange rate fluctuations[227] - A hypothetical 10% adverse change in the U.S. dollar against other currencies would not have had a material impact on operating results for the nine months ended October 31, 2024 and 2023[227] Other Financial Metrics - Restructuring charges decreased by $0.1 million (100$0.8 million (7%) driven by higher income from marketable securities, while other income (expense), net decreased by $0.98 million (162$0.2 million (16%) primarily due to higher foreign taxes from international subsidiaries[191] - Changes in operating assets and liabilities included a $60.1 million increase in deferred contract acquisition costs and a$17.2 million decrease in deferred revenue[214] - A 100 basis point change in interest rates would result in an $8.0 million change in the fair market value of the investment portfolio as of October 31, 2024[226] Subscription Contracts - The company's subscription contracts typically have a term of one to three years, and customers are invoiced upfront, periodically, or in arrears upon signing[163]