SentinelOne(S) - 2026 Q2 - Quarterly Report

Part I - Financial Information Presents SentinelOne's unaudited condensed consolidated financial statements and related notes for the periods ended July 31, 2025 and 2024 Item 1. Financial Statements (Unaudited) This section presents SentinelOne, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, revenue recognition, acquisitions, investments, equity changes, restructuring, income taxes, net loss per share, commitments, employee benefits, and subsequent events for the periods ended July 31, 2025 and 2024 Condensed Consolidated Balance Sheets Provides a snapshot of SentinelOne's financial position, detailing assets, liabilities, and stockholders' equity as of July 31, 2025, and January 31, 2025 Condensed Consolidated Balance Sheets (in thousands) | Metric | July 31, 2025 | January 31, 2025 | | :---------------------------------- | :------------ | :--------------- | | Total Assets | $2,350,484 | $2,406,625 | | Total Liabilities | $842,698 | $737,378 | | Total Stockholders' Equity | $1,507,786 | $1,669,247 | | Cash and cash equivalents | $278,005 | $186,574 | | Accounts receivable, net | $179,332 | $236,012 | | Other liabilities | $156,336 | $21,808 | - Total assets decreased by $56.1 million from January 31, 2025, to July 31, 2025, primarily due to decreases in accounts receivable and long-term investments, despite an increase in cash and cash equivalents[16] - Total liabilities increased by $105.3 million, largely driven by a significant increase in 'Other liabilities' from $21.8 million to $156.3 million, while deferred revenue decreased[16] Condensed Consolidated Statements of Operations Outlines SentinelOne's financial performance, including revenue, gross profit, operating loss, and net loss for the three and six months ended July 31, 2025 and 2024 Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $242,183 | $198,937 | $471,212 | $385,292 | | Gross profit | $181,709 | $148,238 | $354,206 | $284,456 | | Loss from operations | $(80,618) | $(79,381) | $(168,101) | $(159,981) | | Net loss | $(72,019) | $(69,184) | $(280,212) | $(139,289) | | Net loss per share, basic and diluted | $(0.22) | $(0.22) | $(0.85) | $(0.45) | - Revenue increased by 22% for both the three and six months ended July 31, 2025, compared to the prior year periods[17] - Net loss significantly widened for the six months ended July 31, 2025, to $280.2 million, primarily due to a substantial provision for income taxes of $136.76 million, compared to $3.71 million in the prior year[17] Condensed Consolidated Statements of Comprehensive Loss Details SentinelOne's total comprehensive loss, encompassing net loss and other comprehensive income/loss components for the three and six months ended July 31, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(72,019) | $(69,184) | $(280,212) | $(139,289) | | Change in unrealized gains (losses) on investments | $(2,720) | $3,938 | $(825) | $2,695 | | Total comprehensive loss | $(74,739) | $(65,246) | $(281,037) | $(136,594) | - Total comprehensive loss increased by 15% for the three months and 106% for the six months ended July 31, 2025, compared to the same periods in the prior year, driven by higher net loss and negative changes in unrealized gains/losses on investments[19] Condensed Consolidated Statements of Stockholders' Equity Summarizes changes in SentinelOne's stockholders' equity, including net loss, stock-based compensation, and share repurchases for the six months ended July 31, 2025 Changes in Stockholders' Equity (in thousands, six months ended July 31, 2025) | Item | Amount | | :------------------------------------------------ | :------- | | Balance as of January 31, 2025 | $1,669,247 | | Issuance of common stock upon exercise of stock options | $15,229 | | Issuance of common stock under employee purchase plan | $9,065 | | Repurchase of common stock | $(52,693) | | Stock-based compensation | $147,974 | | Other comprehensive loss | $(825) | | Net loss | $(280,212) | | Balance as of July 31, 2025 | $1,507,786 | - Total stockholders' equity decreased by $161.5 million from January 31, 2025, to July 31, 2025, primarily due to a net loss of $280.2 million and $52.7 million in common stock repurchases, partially offset by $148.0 million in stock-based compensation[22] Condensed Consolidated Statements of Cash Flows Presents SentinelOne's cash inflows and outflows from operating, investing, and financing activities for the six months ended July 31, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (in thousands, six months ended July 31) | Cash Flow Activity | 2025 | 2024 | | :----------------------------------- | :------- | :------- | | Net cash provided by operating activities | $51,231 | $44,303 | | Net cash provided by (used in) investing activities | $65,642 | $(115,621) | | Net cash (used in) provided by financing activities | $(28,399) | $21,592 | | Net change in cash, cash equivalents, and restricted cash | $88,474 | $(49,726) | | Cash, cash equivalents, and restricted cash – End of period | $281,776 | $272,360 | - Net cash provided by operating activities increased by 16% to $51.2 million for the six months ended July 31, 2025, driven by non-cash adjustments and changes in operating assets/liabilities, partially offset by net loss[24][170] - Investing activities shifted from a net cash use of $115.6 million in 2024 to a net cash provision of $65.6 million in 2025, primarily due to higher proceeds from sales, maturities, and return of capital of investments[24][172] - Financing activities resulted in a net cash use of $28.4 million in 2025, primarily due to $52.7 million in common stock repurchases, contrasting with a net cash provision of $21.6 million in 2024[24][174] Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements, covering accounting policies, acquisitions, and contingencies 1. Organization and Description of Business Describes SentinelOne, Inc.'s incorporation, business as an AI-powered cybersecurity provider, and global operational presence - SentinelOne, Inc. was incorporated in January 2013 in Delaware and is a cybersecurity provider offering an artificial intelligence-powered platform for autonomous cybersecurity defense[25] - The company's headquarters is located in Mountain View, California, with various other global office locations[25] 2. Summary of Significant Accounting Policies Outlines the accounting principles and policies used in preparing the financial statements, including GAAP compliance and evaluation of new ASUs - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules for interim financial reporting, consolidating SentinelOne and its wholly-owned subsidiaries[26][28] - Management's estimates and assumptions are used, with no material changes in estimates or significant accounting policies from the prior Annual Report[29][30] - The company is evaluating new FASB ASUs: ASU No. 2023-09 (Income Tax Disclosures) effective for annual periods after December 15, 2024, and ASU No. 2024-03 (Expense Disaggregation Disclosures) effective for fiscal years beginning after December 15, 2026[31][32] - SentinelOne operates as a single operating and reportable segment, with its Chief Executive Officer serving as the chief operating decision maker[33] 3. Revenue and Contract Balances Details SentinelOne's revenue recognition practices, geographical revenue breakdown, and contract balances, including remaining performance obligations and deferred revenue Revenue by Geography (in thousands, except percentages) | Geography | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :---------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $149,650 (62%) | $126,260 (63%) | $292,091 (62%) | $244,502 (63%) | | International | $92,533 (38%) | $72,677 (37%) | $179,121 (38%) | $140,790 (37%) | | Total | $242,183 (100%) | $198,937 (100%) | $471,212 (100%) | $385,292 (100%) | - Substantially all sales are fulfilled through channel partners, including distributors, resellers, and managed security service providers[37] - Remaining performance obligations were $1.2 billion as of July 31, 2025, with 85% expected to be recognized as revenue over the next 24 months[42] - Deferred revenue decreased from $572.1 million as of January 31, 2025, to $546.8 million as of July 31, 2025[39] 4. Acquisitions Provides information on SentinelOne's recent acquisitions, PingSafe Pte. Ltd. and Stride Security Ltd., including purchase prices and allocation of assets - On February 1, 2024, SentinelOne acquired PingSafe Pte. Ltd. for approximately $83.0 million (cash and Class A common stock) to integrate cloud security capabilities[43][46] - The PingSafe acquisition resulted in the allocation of $11.3 million to intangible assets (customer relationships and developed technology) and $72.9 million to goodwill[44][48] - Also on February 1, 2024, SentinelOne acquired Stride Security Ltd. for $7.5 million to enhance hyper-automation across its platform, allocating $0.4 million to developed technology and $7.3 million to goodwill[49][50] - Post-combination compensation expense of $46.9 million related to PingSafe (restricted common stock and assumed options) is expected to be recognized through February 2028[44][45] 5. Cash and Cash Equivalents, Investments, and Fair Value Measurements Details SentinelOne's cash, cash equivalents, and investment portfolio, along with fair value measurements and investment gains Cash, Cash Equivalents, and Investments (in thousands) | Category | July 31, 2025 | January 31, 2025 | | :-------------------------- | :------------ | :--------------- | | Cash and cash equivalents | $278,005 | $186,574 | | Short-term investments | $532,818 | $535,331 | | Long-term investments | $316,901 | $396,207 | | Total assets measured at fair value | $1,127,724 | $1,118,112 | - The company's investment portfolio consists primarily of highly rated U.S. treasury securities, commercial paper, corporate notes and bonds, and U.S. agency securities, with all investments maturing within two years as of July 31, 2025[54][55] - Gains on non-marketable strategic investments were $0.8 million for both the three and six months ended July 31, 2025[59] 6. Supplemental Financial Statement Information Presents additional financial details, including intangible assets, other liabilities, and estimated future amortization expenses Intangible Assets, Net (in thousands) | Category | July 31, 2025 | January 31, 2025 | | :---------------------------------- | :------------ | :--------------- | | Total finite-lived intangible assets, net | $94,017 | $106,900 | | Indefinite-lived intangible assets - domain names | $255 | $255 | | Total intangible assets, net | $94,272 | $107,155 | Other Liabilities (in thousands) | Category | July 31, 2025 | January 31, 2025 | | :---------------------------------- | :------------ | :--------------- | | Income tax liability related to APA | $136,000 | $— | | Operating lease liabilities, non-current | $11,543 | $13,787 | | Deferred tax liabilities | $5,124 | $4,960 | | Other long-term liabilities | $3,669 | $3,061 | | Total other liabilities | $156,336 | $21,808 | - Other liabilities significantly increased to $156.3 million as of July 31, 2025, primarily due to a $136.0 million income tax liability related to the Advance Pricing Agreement (APA) matter[62] Estimated Future Amortization Expense of Intangible Assets (in thousands) | Fiscal Year Ending January 31 | Amount | | :---------------------------- | :----- | | Remainder of 2026 | $13,203 | | 2027 | $26,192 | | 2028 | $16,432 | | 2029 | $10,596 | | 2030 | $8,676 | | Thereafter | $18,918 | | Total | $94,017 | 7. Stockholders' Equity Details changes in SentinelOne's stockholders' equity, including stock-based compensation expense and share repurchase activities Stock-Based Compensation Expense (in thousands) | Period | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total | $73,884 | $64,677 | $142,539 | $123,230 | - Total stock-based compensation expense increased by 14% for the three months and 16% for the six months ended July 31, 2025, compared to the prior year periods[63] - As of July 31, 2025, unrecognized stock-based compensation expense related to unvested RSUs was $631.7 million (weighted-average period of 2.9 years), PSUs was $6.5 million (0.8 years), and stock options was $12.7 million (0.9 years)[64][66][67] - Under the 2025 Share Repurchase Program, the company repurchased 3.0 million shares of Class A common stock for $52.7 million during the three and six months ended July 31, 2025, with $147.3 million remaining available[74][385] 8. Restructuring Describes SentinelOne's restructuring plans in March and July 2025, including associated charges and completion status - The March 2025 restructuring plan incurred approximately $5.2 million in charges (primarily severance, employee benefits, and asset impairment) and was completed as of July 31, 2025[75] - The July 2025 restructuring plan incurred approximately $3.9 million in contract termination charges during the three months ended July 31, 2025, with an additional $3.1 million expected in August 2025 for severance and employee benefits[76] 9. Income Taxes Explains SentinelOne's income tax provisions, including a significant tax contingency related to Advance Pricing Agreement (APA) negotiations and the impact of new tax legislation - During the six months ended July 31, 2025, the company incurred a discrete tax expense of $136.0 million related to a long-term tax contingency from ongoing bilateral Advance Pricing Agreement (APA) negotiations with the U.S. IRS and Israel Tax Authority (ITA)[78][81] - This tax expense was partially offset by a $4.7 million discrete tax benefit from the release of a valuation allowance upon the recognition of Israeli deferred tax assets, also related to the APA matter[78] - The effective tax rate, excluding these discrete items, was (4.8)% for the three months and (3.8)% for the six months ended July 31, 2025[78] - The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, restores immediate expensing of domestic R&E expenditures, but the company does not expect a material effect on its condensed consolidated financial statements[79] 10. Net Loss Per Share Attributable to Common Stockholders Presents SentinelOne's basic and diluted net loss per share and discusses the treatment of potentially dilutive securities Net Loss Per Share Attributable to Class A and Class B Common Stockholders (Basic and Diluted) | Period | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss per share | $(0.22) | $(0.22) | $(0.85) | $(0.45) | - Potentially dilutive securities, totaling 48.5 million as of July 31, 2025 (including RSUs, PSUs, stock options, and restricted common stock), were excluded from diluted net loss per share calculation as their effect was anti-dilutive due to the net loss[83][86] 11. Commitments and Contingencies Details SentinelOne's legal proceedings, warranties, indemnifications, and a significant long-term tax contingency related to APA negotiations - The company is a defendant in a securities class action lawsuit (Johansson v. SentinelOne, Inc.) and shareholder derivative complaints, which it intends to vigorously defend[88][89][90] - SentinelOne provides general warranties for its platform, indemnifies customers for intellectual property infringement, and offers a limited cybersecurity breach warranty, with no material costs incurred to date[91][92] - A $136.0 million long-term tax contingency has been recorded related to ongoing bilateral Advance Pricing Agreement (APA) negotiations with the IRS and ITA concerning intercompany transfer pricing, with the outcome remaining uncertain[94] 12. Employee Benefit Plan Describes SentinelOne's employee benefit plans, including 401(k) matching contributions and Israeli severance expenses 401(k) Matching Contributions (in thousands) | Period | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Matching contributions | $0.5 | $0.4 | $1.9 | $1.8 | Israeli Severance Expenses (in thousands) | Period | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Severance expenses | $0.9 | $0.8 | $1.8 | $1.7 | - Israeli employees are entitled to monthly deposits into insurance companies (8.33% of salary) as per Section 14 of the Severance Compensation Act, releasing the company from future severance payment obligations[96] 13. Subsequent Events Reports significant events occurring after the balance sheet date, including a planned acquisition in August 2025 - On August 5, 2025, SentinelOne entered an agreement to acquire a privately-held company for approximately $180.0 million, primarily consisting of cash and Class A common stock, with the acquisition expected to close in the third quarter of fiscal 2026[98] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on SentinelOne's financial condition and results of operations, highlighting its AI-powered cybersecurity platform, rapid revenue growth, and ongoing net losses due to investments. It discusses the impact of macroeconomic conditions, key business metrics, components of financial results, liquidity, and critical accounting policies, including a significant tax contingency related to an APA matter Overview Introduces SentinelOne's AI-powered cybersecurity platform, its revenue generation model, recent growth, and key customer metrics - SentinelOne pioneered an AI-powered Singularity Platform for autonomous cybersecurity defense, ingesting and correlating petabytes of data for high accuracy and autonomy across diverse IT environments[101][102][103] - The company generates most revenue from subscriptions to its Singularity Platform and modules, typically with one-to-three-year contracts, recognized ratably[104][105] - Revenue grew 22% year-over-year for both the three and six months ended July 31, 2025, reaching $242.2 million and $471.2 million, respectively, while net losses persisted due to continued business investments[108] - Customers with Annualized Recurring Revenue (ARR) of $100,000 or more increased by 23% year-over-year to 1,513 as of July 31, 2025[107][121] Impact of Global Macroeconomic and Geopolitical Conditions Discusses how global economic and geopolitical factors influence SentinelOne's sales, operations, and financial outlook - Worsening global macroeconomic and geopolitical conditions, including inflation, interest rate volatility, and regional conflicts, have led to decreased sales productivity, longer sales cycles, and deal downsizing, particularly among larger enterprise customers[109] - The company is closely monitoring these conditions and may take financial or operational actions in response, but the full impact on future results, liquidity, and financial condition remains uncertain[110][111] Key Business Metrics and Non-GAAP Financial Measures Presents SentinelOne's key performance indicators, including revenue, non-GAAP operating income, ARR, and customer growth Revenue (in thousands) | Period | 2025 | 2024 | | :---------------------- | :------- | :------- | | Three Months Ended July 31 | $242,183 | $198,937 | | Six Months Ended July 31 | $471,212 | $385,292 | Non-GAAP Operating Income (Loss) (in thousands) | Period | 2025 | 2024 | | :---------------------- | :------- | :------- | | Three Months Ended July 31 | $5,376 | $(6,359) | | Six Months Ended July 31 | $1,449 | $(17,440) | - Non-GAAP operating income significantly improved, turning positive to $5.4 million for the three months and $1.4 million for the six months ended July 31, 2025, compared to losses in the prior year periods[116][117] Annualized Recurring Revenue (ARR) (in thousands) | As of July 31 | 2025 | 2024 | YoY Growth | | :-------------- | :--------- | :--------- | :--------- | | ARR | $1,001,360 | $806,017 | 24% | Customers with ARR of $100,000 or More | As of July 31 | 2025 | 2024 | YoY Growth | | :-------------- | :----- | :----- | :--------- | | Number of Customers | 1,513 | 1,233 | 23% | - Dollar-Based Net Retention Rate (NRR) remained in expansionary territory as of July 31, 2025, driven by existing customers adopting additional endpoint licenses and platform solutions[122] Components of Our Results of Operations Explains the primary drivers of SentinelOne's revenue, cost of revenue, operating expenses, and income tax provisions - Revenue is primarily derived from subscriptions to the Singularity Platform and modules, with recognition occurring ratably over typical one-to-three-year contract terms[123][124] - Cost of revenue mainly comprises third-party cloud infrastructure expenses, personnel-related costs for customer support, and amortization of acquired intangible assets and capitalized internal-use software[125] - Operating expenses include research and development, sales and marketing, general and administrative, and restructuring charges, with personnel-related expenses being the most significant component across these categories[127] - The provision for income taxes includes foreign income taxes and the tax effects of the APA matter, which involved a $136.0 million tax expense for unrecognized tax benefits and a $4.7 million discrete tax benefit from the release of a valuation allowance[136][138] Results of Operations Provides a detailed analysis of SentinelOne's financial performance, including revenue, gross profit, operating expenses, and net loss for the reported periods Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $242,183 | $198,937 | $471,212 | $385,292 | | Gross profit | $181,709 | $148,238 | $354,206 | $284,456 | | Total operating expenses | $262,327 | $227,619 | $522,307 | $444,437 | | Loss from operations | $(80,618) | $(79,381) | $(168,101) | $(159,981) | | Net loss | $(72,019) | $(69,184) | $(280,212) | $(139,289) | - Revenue increased by 22% for both the three and six months ended July 31, 2025, driven by new customer sales and expanded licenses/solutions for existing customers[142][151] - Gross margin remained at 75% for the three months and increased to 75% from 74% for the six months ended July 31, 2025, as revenue growth outpaced the increase in cost of revenue[143][152] - The provision for income taxes for the six months ended July 31, 2025, surged by $133.1 million to $136.76 million, primarily due to a $136.0 million accrual for an unrecognized tax benefit related to the APA matter[159] Liquidity and Capital Resources Assesses SentinelOne's financial resources, including cash, investments, accumulated deficit, and cash flow activities, to meet its operational needs - As of July 31, 2025, the company had $1.2 billion in cash, cash equivalents, and investments, serving as its principal source of liquidity[162] - The accumulated deficit reached $1.9 billion as of July 31, 2025, and the company expects continued operating losses and significant expenses, including potential substantial payments related to the APA matter[161][162] - Existing liquidity is believed to be sufficient for working capital and capital expenditures for at least the next 12 months, despite expected cash outflows for restructuring ($3.1 million) and the Prompt Security acquisition ($144.0 million)[163] Summary of Cash Flows (in thousands, six months ended July 31) | Cash Flow Activity | 2025 | 2024 | | :----------------------------------- | :------- | :------- | | Net cash provided by operating activities | $51,231 | $44,303 | | Net cash provided by (used in) investing activities | $65,642 | $(115,621) | | Net cash (used in) provided by financing activities | $(28,399) | $21,592 | - The company repurchased 3.0 million shares of Class A common stock for $52.7 million under its 2025 Share Repurchase Program, with $147.3 million remaining available as of July 31, 2025[165] Contractual Obligations and Commitments Summarizes SentinelOne's contractual obligations and commitments, noting no material changes from its Annual Report - There were no material changes outside the ordinary course of business in the company's contractual obligations and commitments from those disclosed in its Annual Report[176] Critical Accounting Policies and Estimates Highlights the significant accounting policies and management estimates that are crucial to SentinelOne's financial reporting - The preparation of financial statements requires significant management estimates and assumptions, particularly for stock-based compensation, deferred contract acquisition costs, asset useful lives, business combination valuations, and income taxes[177][354] - A material change in the six months ended July 31, 2025, was the recording of a $136.0 million income tax expense related to reassessing an uncertain tax position in APA negotiations, alongside a $4.7 million valuation allowance release for Israeli deferred tax assets[178][181] Recently Issued Accounting Pronouncements Refers to Note 2 for details on new accounting standards and their expected impact on SentinelOne's financial statements - For a description of recently issued accounting pronouncements and their expected impact, refer to Note 2, 'Summary of Significant Accounting Policies,' in Part I, Item 1 of this Quarterly Report on Form 10-Q[182] Item 3. Quantitative and Qualitative Disclosures about Market Risk SentinelOne is exposed to market risks primarily from interest rate fluctuations and foreign currency exchange rates. A hypothetical 100 basis point change in interest rates would impact its $1.2 billion investment portfolio by $6.7 million, while a 10% adverse change in the U.S. dollar could increase operating loss by $15.0 million for the six months ended July 31, 2025. The company does not currently use derivative instruments for hedging - The company's market risk exposure primarily stems from fluctuations in interest rates and foreign currency exchange rates[183] - As of July 31, 2025, a hypothetical 100 basis point change in interest rates would result in a $6.7 million change in the fair market value of its $1.2 billion cash, cash equivalents, and investments portfolio[184] - A hypothetical 10% adverse change in the U.S. dollar against other currencies would have increased the operating loss by approximately $15.0 million for the six months ended July 31, 2025[185] - The company does not currently engage in derivative or hedging transactions to mitigate foreign currency exchange rate risks[185] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that SentinelOne's disclosure controls and procedures were effective at a reasonable assurance level as of July 31, 2025. No material changes in internal control over financial reporting occurred during the period. The company acknowledges the inherent limitations of control systems, which provide reasonable, but not absolute, assurance against errors or fraud - Management, with the participation of the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of July 31, 2025[186] - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the period[187] - Management acknowledges that control systems, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that objectives are met and may not prevent or detect all errors and fraud[188] Part II - Other Information Contains additional non-financial information and disclosures not included in the financial statements section Item 1. Legal Proceedings SentinelOne is currently involved in various legal proceedings, including securities class action and derivative litigation, as further detailed in Note 11, 'Commitments and Contingencies,' to its unaudited condensed consolidated financial statements - The company is a party to various legal proceedings and subject to claims in the ordinary course of business[190] - For more information regarding legal proceedings, refer to Note 11, 'Commitments and Contingencies,' in Part I, Item 1 of this Quarterly Report on Form 10-Q[190] Item 1A. Risk Factors This section outlines the significant risks associated with investing in SentinelOne's Class A common stock, covering challenges related to its business and industry (e.g., limited operating history, competition, macroeconomic impacts, security incidents, acquisitions), its people (e.g., reliance on key employees, hiring challenges), intellectual property (e.g., enforcement, infringement claims), legal and regulatory compliance (e.g., privacy, export controls, AI regulation), financial and accounting matters (e.g., public company costs, tax liabilities, currency fluctuations), and ownership of its stock (e.g., price volatility, dual-class structure) Summary Risk Factors Provides a high-level overview of the principal risks that could materially affect SentinelOne's business, financial condition, and stock price - Key business and industry risks include a limited operating history, a history of losses, intense competition, fluctuating operating results, adverse global macroeconomic conditions, security incidents, product defects, and challenges with acquisitions and customer retention[193] - Regulatory risks involve compliance with privacy and data protection laws, while people-related risks center on reliance on key employees and the ability to hire, integrate, and retain qualified personnel[194][195] - Intellectual property risks include difficulties in enforcing proprietary rights and potential claims of infringement by third parties[198] - Risks related to stock ownership include market price volatility and the concentration of voting control with Class B common stock holders due to the dual-class structure[198] Risks Related to Our Business and Industry Details specific risks inherent to SentinelOne's operations and the cybersecurity industry, including competition, growth, and product integrity - The company's limited operating history and rapid growth make future results difficult to forecast, and it has a history of net losses ($1.9 billion accumulated deficit as of July 31, 2025) with anticipated increases in operating expenses[196][200] - Intense competition in the rapidly evolving cybersecurity market, coupled with adverse global macroeconomic conditions, can lead to market share loss, reduced revenue growth, longer sales cycles, and deal downsizing[201][209] - Security incidents against the company or its third-party vendors, defects/vulnerabilities in its platform, or failure to block threats could harm its reputation, create liability, and adversely affect financial condition[220][226] - Challenges exist in integrating acquisitions (e.g., PingSafe, Stride), retaining and expanding customer relationships, effectively interoperating with diverse IT infrastructures, and managing reliance on third-party cloud hosting providers[233][240][242][244] - The company's AI initiatives, including generative AI, present risks such as flawed results, data controversies, reliance on third-party models, and potential litigation, which could impact its business and reputation[216][217] Risks Related to Our People Addresses risks associated with SentinelOne's human capital, including reliance on key personnel and challenges in talent acquisition and retention - The company's future success is highly dependent on its management team and other key employees, including CEO Tomer Weingarten; the loss of such personnel or inability to hire/retain qualified talent could disrupt operations[281][282] - Intense competition for skilled personnel in the technology and cybersecurity industries, high employee attrition, and restrictive immigration policies pose significant challenges to recruitment and retention efforts[283][284] - Failure to effectively integrate, train, manage, and retain sales personnel, especially in international markets, could hinder customer base expansion and sales growth[289][290] - Any inability to maintain a high-quality customer support organization could lead to customer dissatisfaction, damage customer relationships, and adversely affect business and reputation[291][292] Risks Related to Our Intellectual Property Outlines risks concerning SentinelOne's intellectual property, such as enforcement challenges and potential infringement claims - The company relies on patents, trademarks, copyrights, and trade secrets, but enforcement is difficult due to challenges in obtaining broad patent protection, unauthorized copying, and varying international IP laws[294][296] - Third parties have claimed and may claim in the future that the company's platform infringes their intellectual property rights, potentially leading to costly litigation, damages, and the need for licenses or alternative technologies[298][301] - Reliance on licensed third-party technology exposes the company to infringement risks and the potential inability to maintain licenses, which could harm its ability to develop and sell solutions[302][303] - The incorporation of open-source software components carries risks of non-compliance with license terms, potential requirements to release proprietary source code, and exposure to security vulnerabilities[304][305][306] Risks Related to Legal and Regulatory Matters Covers legal and regulatory compliance risks, including data privacy, export controls, and the evolving landscape of AI regulation - The company is subject to complex and evolving laws and regulations, including government export/import controls, sanctions, and anti-corruption laws (FCPA, Bribery Act), with non-compliance potentially leading to significant liabilities, fines, and reputational harm[307][312] - Extensive privacy and data protection laws (e.g., GDPR, CCPA, DORA) govern personal data; failure to comply or perceived failures could result in substantial costs, fines (up to €20 million or 4% global turnover under GDPR), regulatory investigations, and reputational damage[314][317][324][327][330] - The rapid evolution of AI technology introduces new governmental and regulatory scrutiny, potentially requiring significant resources for compliance and exposing the company to litigation risks related to accuracy, bias, and intellectual property[313] - Ongoing legal proceedings, including securities class action and derivative litigation, can result in substantial costs, diversion of management attention, and potential adverse impacts on brand recognition and business practices[331] Risks Related to Financial and Accounting Matters Discusses financial and accounting risks, including public company costs, tax liabilities, and currency fluctuations - Operating as a public company incurs significant legal, accounting, and compliance costs, straining resources, diverting management attention, and potentially affecting the ability to attract and retain executive management and qualified board members[332][337] - The company faces additional tax liabilities due to complex international tax laws, transfer pricing policies, and ongoing APA negotiations, which led to a $136.0 million tax expense for uncertain tax benefits and could result in significant future payments[339][350] - The ability to use net operating loss carryforwards ($772.4 million federal, $447.9 million state as of January 31, 2025) and certain other tax attributes may be limited by ownership changes under Sections 382 and 383 of the Internal Revenue Code[345][346] - Fluctuations in currency exchange rates could negatively affect operating results and financial condition, as a strengthening U.S. dollar increases costs for international customers, and a weakening dollar increases operating expenses[356][357] - The company's share repurchase program may not be fully consummated or enhance long-term stockholder value, and could increase stock volatility or diminish cash reserves[338] Risks Related to Ownership of Our Class A Common Stock Highlights risks specific to holding SentinelOne's Class A common stock, such as price volatility and the dual-class structure - The market price of the company's Class A common stock is likely to be volatile due to factors such as operating results, market speculation, macroeconomic conditions, and litigation, potentially leading to investment losses[360][361] - Sales of substantial amounts of Class A common stock in the public markets, particularly by directors, executive officers, and principal stockholders, or future equity issuances, could cause the market price to decline and result in dilution[362][364] - The dual-class common stock structure concentrates voting control with Class B common stock holders (approximately 47% of voting power as of July 31, 2025), limiting other stockholders' ability to influence corporate matters and potentially affecting the trading market for Class A common stock[366][368] - Provisions in the company's charter documents and under Delaware law (e.g., classified board, super-majority voting, exclusive forum provisions) could delay or prevent an acquisition or limit stockholders' attempts to replace management[376][377][378] General Risk Factors Encompasses broader risks that could impact SentinelOne, including natural disasters, geopolitical events, and corporate sustainability expectations - The company may be adversely affected by natural disasters, pandemics, and man-made problems such as war and regional geopolitical conflicts (e.g., Middle East, Ukraine), which could disrupt business operations, especially given 11% of personnel are in Israel[369] - Investors' expectations regarding corporate sustainability may impose additional costs and expose the company to new risks, including reputational damage if sustainability standards are not met or new climate-related disclosure requirements are not complied with[371][372] - If industry or financial analysts do not publish research or issue inaccurate/unfavorable reports about the business, the stock price and trading volume could decline[373] - The company does not intend to pay dividends in the foreseeable future, meaning investors must rely on stock price appreciation for returns[375] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds SentinelOne reported no unregistered sales of equity securities or use of proceeds. However, it repurchased 2,960,897 shares of Class A common stock for $52.7 million in June 2025 under its $200.0 million 2025 Share Repurchase Program, with $147.3 million remaining available - There were no unregistered sales of equity securities during the period[384] - There was no use of proceeds to report[385] Issuer Purchases of Equity Securities (Three Months Ended July 31, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (in thousands) | | :-------------------------- | :------------------------------- | :--------------------------- | :--------------------------------------------------------- | :----------------------------------------------------------------------------- | | May 1, 2025 to May 31, 2025 | — | $— | — | $200,000 | | June 1, 2025 to June 30, 2025 | 2,960,897 | $17.78 | 2,960,897 | $147,366 | | July 1, 2025 to July 31, 2025 | — | $— | — | $147,366 | | Total | 2,960,897 | | 2,960,897 | | - The 2025 Share Repurchase Program, authorized in May 2025 for up to $200.0 million, had $147.3 million remaining as of July 31, 2025[385] Item 3. Defaults Upon Senior Securities This item is not applicable to SentinelOne for the reported period - This item is not applicable[386] Item 4. Mine Safety Disclosures This item is not applicable to SentinelOne for the reported period - This item is not applicable[387] Item 5. Other Information This section reports no other information under sub-item (a). Under sub-item (c), it details that CEO Tomer Weingarten adopted a Rule 10b5-1 Plan on June 3, 2025, for the potential sale of Class A common stock (including conversions from Class B and shares from RSU/PSU vesting) between September 2025 and September 2026 - No other information is reported under sub-item (a)[388] - On June 3, 2025, Tomer Weingarten, President and CEO, adopted a Rule 10b5-1 Plan (the Weingarten Plan) for the potential sale of 753,243 shares of Class A common stock (issuable upon Class B conversion) and certain shares from RSU/PSU vesting[390][391] - The sales under the Weingarten Plan are scheduled to occur between an estimated start date of September 11, 2025, and an estimated end date of September 15, 2026[391] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including various certifications (e.g., 31.1, 31.2, 32.1) and Inline XBRL documents, with specific notes on the filing status of certain certifications - The section lists all exhibits filed as part of this Quarterly Report on Form 10-Q[392] - Exhibits include certifications from the Principal Executive Officer (31.1), Principal Financial Officer (31.2), and CEO/CFO (32.1), along with various Inline XBRL documents[393] - The certifications furnished in Exhibit 32.1 are deemed to accompany the report but are not considered 'filed' for purposes of Section 18 of the Exchange Act[393] Signatures This section contains the required signatures for the Quarterly Report on Form 10-Q, certifying its submission on behalf of SentinelOne, Inc. by its Chief Financial Officer - The report is duly signed on behalf of SentinelOne, Inc. by Barbara Larson, Chief Financial Officer, on August 28, 2025[395][397]