SentinelOne(S) - 2026 Q2 - Quarterly Results

Second Quarter Fiscal Year 2026 Financial Results Overview SentinelOne reported strong Q2 FY26 results with significant revenue and ARR growth, achieving non-GAAP operating profitability and improved GAAP margins Highlights of Q2 FY26 Performance SentinelOne demonstrated robust performance in Q2 FY26, with revenue growing 22% to $242.2 million and ARR increasing 24% to $1.0 billion, achieving non-GAAP operating profitability and improved GAAP margins Key Financial Metrics for Q2 FY26 | Metric | Amount/Ratio | | :-------------------------------- | :---------- | | Total Revenue | $242.2 million (up 22% year-over-year) | | Annualized Recurring Revenue (ARR) | $1.0 billion (up 24% year-over-year) | | Customers with ARR ≥ $100,000 | 1,513 (up 23% year-over-year) | | GAAP Gross Margin | 75% | | Non-GAAP Gross Margin | 79% | | GAAP Operating Margin | (33)% | | Non-GAAP Operating Margin | 2% | | GAAP Net Loss Margin | (30)% | | Non-GAAP Net Income Margin | 5% | | Operating Cash Flow Margin | 0% | | Free Cash Flow Margin | (3)% | | Cash, Cash Equivalents, and Investments | $1.2 billion | Management Commentary CEO Tomer Weingarten highlighted ARR surpassing $1.0 billion and record net new ARR, driven by the AI-powered platform's broad adoption across AI, data, cloud, and endpoint domains, while CFO Barbara Larson noted top-tier growth, margin expansion, and reaffirmed full-year profitability and free cash flow commitments - ARR surpassed $1.0 billion, achieving record net new ARR, driven by platform adoption across AI, data, cloud, and endpoint domains[3] - The AI-powered platform demonstrated strong momentum, enhancing competitive positioning and product differentiation[3] - Achieved top-tier growth and margin expansion, underscoring business model scalability and operating leverage[3] - Full-year revenue outlook was raised, and commitments for full-year operating profitability and free cash flow were reaffirmed[3] Financial Outlook The company provides Q3 FY26 and full-year guidance, projecting continued revenue growth and sustained non-GAAP operating profitability Q3 FY26 and Full FY2026 Guidance SentinelOne provided financial guidance for Q3 FY26 and the full fiscal year 2026, anticipating sustained revenue growth and maintaining non-GAAP operating profitability Q3 FY26 and Full FY2026 Financial Guidance | Metric | Q3 FY26 Guidance | Full FY2026 Guidance | | :-------------------- | :------------------- | :------------------- | | Revenue | $256 million | $998 - 1,002 million | | Non-GAAP Gross Margin | 78.5% | 78.5 - 79% | | Non-GAAP Operating Margin | 4% | 3% | Non-GAAP Financial Measures and Key Business Metrics This section explains the company's use of non-GAAP financial measures and key business metrics like ARR to assess performance and guide strategic decisions Explanation of Non-GAAP Financial Measures The company uses non-GAAP financial measures to evaluate operational performance, ensure consistency and comparability with past financial results, and aid internal planning, providing a clearer view of core operations by excluding certain non-cash or non-recurring items - Non-GAAP measures are utilized for evaluating ongoing operations, internal planning, and forecasting, offering consistency and comparability with historical performance[15] - Non-GAAP information is supplementary and should not be considered in isolation from GAAP financial information[15] Specific Non-GAAP Adjustments This section details specific items excluded when adjusting from GAAP to non-GAAP metrics, including stock-based compensation, employer payroll taxes related to employee stock transactions, amortization of acquired intangible assets, acquisition-related compensation, restructuring charges, strategic investment gains/losses, and income tax provision, with adjustments for diluted shares - Stock-based compensation expenses are excluded due to their non-cash nature and volatility, providing a clearer view of core performance[18][19] - Employer payroll taxes related to employee stock transactions are excluded due to their volatility influenced by market forces[20] - Amortization of acquired intangible assets is excluded for a more accurate assessment of ongoing operations[21] - Acquisition-related compensation costs are excluded as they are part of specific acquisition negotiations and not core operating performance[22] - Restructuring charges are excluded as they are discrete events and not part of core operating activities[23] - Strategic investment gains and losses are excluded as they are discrete events and not part of core operating activities[24] - A $136 million income tax expense and $4.7 million tax benefit related to negotiations with Israeli tax authorities are excluded as discrete, non-recurring items[25] - Dilutive common stock equivalents are included when non-GAAP net income exists, using the treasury stock method for calculating non-GAAP diluted net income per share[26] Non-GAAP Definitions This section defines various non-GAAP financial metrics, including non-GAAP cost of revenue, gross profit, gross margin, operating income/loss, operating margin, net income, and net income per share, all adjusted for the aforementioned exclusions, with free cash flow specifically defined as cash flow from operating activities less purchases of property and equipment and capitalized internal-use software costs - Non-GAAP cost of revenue, gross profit, gross margin, operating income (loss), operating margin, net income, and net income per share are all defined as their respective GAAP measures less specific expenses[27] - Free cash flow is defined as cash flow from operating activities less purchases of property and equipment and capitalized internal-use software costs, serving as a liquidity metric[28] Key Business Metrics Definitions SentinelOne uses Annualized Recurring Revenue (ARR) and the number of customers with ARR of $100,000 or more as key metrics to evaluate business performance, identify trends, and make strategic decisions - The company monitors key metrics to assess business performance, identify trends, formulate business plans, and make strategic decisions[29] Annualized Recurring Revenue (ARR) ARR is a key operational metric measuring the annualized revenue run-rate from subscriptions and consumption/usage-based agreements at the end of the reporting period, assuming contracts renew on existing terms, reflecting the company's ability to acquire new customers and maintain and expand existing relationships - ARR measures the annualized revenue run-rate from subscriptions and consumption/usage-based agreements, reflecting the ability to acquire and expand customer relationships[30] - ARR is not a forecast of future revenue[30] Customers with ARR of $100,000 or More This metric reflects market penetration and platform strategic demand, defining customers as entities with active platform subscriptions, where managed service providers are counted as single customers, excluding resellers or distribution channel partners - Growth in customers with ARR of $100,000 or more indicates market penetration and demand for the platform strategy[31] - Customers are defined as entities with active subscriptions, with managed service providers counted as single customers, excluding resellers or distributors[31][32] Condensed Consolidated Financial Statements (Unaudited) Unaudited condensed consolidated financial statements present the company's balance sheets, statements of operations, and cash flows for the specified periods Condensed Consolidated Balance Sheets The balance sheet provides a snapshot of the company's financial position as of July 31, 2025, and January 31, 2025, detailing assets, liabilities, and stockholders' equity, showing a slight decrease in total assets and an increase in total liabilities primarily due to a significant rise in other liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | July 31, 2025 | January 31, 2025 | Change | | :-------------------------------- | :------------- | :------------- | :----- | | Total Current Assets | $1,092,698 | $1,069,722 | +$22,976 | | Total Assets | $2,350,484 | $2,406,625 | -$56,141 | | Total Current Liabilities | $596,776 | $613,553 | -$16,777 | | Other Liabilities | $156,336 | $21,808 | +$134,528 | | Total Liabilities | $842,698 | $737,378 | +$105,320 | | Total Stockholders' Equity | $1,507,786 | $1,669,247 | -$161,461 | Condensed Consolidated Statements of Operations For the three and six months ended July 31, 2025, SentinelOne experienced revenue growth, but net loss also increased, primarily due to a significant rise in income tax provision during the six-month period Condensed Consolidated Statements of Operations Highlights (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | Y-o-Y Change | Y-o-Y Growth Rate | | :-------------------- | :----- | :----- | :------- | :--------- | | Revenue | $242,183 | $198,937 | +$43,246 | 21.7% | | Gross Profit | $181,709 | $148,238 | +$33,471 | 22.6% | | Operating Loss | $(80,618) | $(79,381) | -$1,237 | -1.6% | | Net Loss | $(72,019) | $(69,184) | -$2,835 | -4.1% | | Net Loss Per Share | $(0.22) | $(0.22) | $0.00 | 0.0% | Condensed Consolidated Statements of Operations Highlights (Six Months Ended July 31, in thousands) | Metric | 2025 | 2024 | Y-o-Y Change | Y-o-Y Growth Rate | | :-------------------- | :----- | :----- | :------- | :--------- | | Revenue | $471,212 | $385,292 | +$85,920 | 22.3% | | Gross Profit | $354,206 | $284,456 | +$69,750 | 24.5% | | Operating Loss | $(168,101) | $(159,981) | -$8,120 | -5.1% | | Income Tax Provision | $136,762 | $3,711 | +$133,051 | 3585.3% | | Net Loss | $(280,212) | $(139,289) | -$140,923 | -101.2% | | Net Loss Per Share | $(0.85) | $(0.45) | -$0.40 | -88.9% | Condensed Consolidated Cash Flow Statements For the six months ended July 31, 2025, net cash from operating activities increased, and investing activities shifted from net cash usage to net cash inflow, primarily due to changes in investment purchases and sales proceeds, while financing activities resulted in net cash outflow mainly due to common stock repurchases Condensed Consolidated Cash Flow Statements Highlights (Six Months Ended July 31, in thousands) | Metric | 2025 | 2024 | Change | | :------------------------------------ | :----- | :----- | :----- | | Net Cash From Operating Activities | $51,231 | $44,303 | +$6,928 | | Net Cash From Investing Activities | $65,642 | $(115,621) | +$181,263 | | Net Cash From Financing Activities | $(28,399) | $21,592 | -$49,991 | | Net Change in Cash, Cash Equivalents, and Restricted Cash | $88,474 | $(49,726) | +$138,200 | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $281,776 | $272,360 | +$9,416 | Reconciliation of GAAP to Non-GAAP Financial Information (Unaudited) This section provides detailed reconciliations between GAAP and non-GAAP financial measures, highlighting adjustments for various non-cash and non-recurring items Cost of Revenue and Gross Profit/Margin Reconciliation The reconciliation table shows adjustments made to GAAP cost of revenue and gross profit/margin to arrive at non-GAAP figures, primarily by excluding stock-based compensation, employer payroll taxes, amortization of acquired intangible assets, and acquisition-related compensation, with Q2 FY26 non-GAAP gross margin at 79%, a slight decrease from 80% in Q2 FY25 Non-GAAP Gross Margin (Three Months Ended July 31) | Metric | 2025 | 2024 | | :-------------------- | :--- | :--- | | GAAP Gross Margin | 75% | 75% | | Non-GAAP Gross Margin | 79% | 80% | Operating Expenses Reconciliation This section details the reconciliation of GAAP operating expenses (research and development, sales and marketing, general and administrative, restructuring) to their non-GAAP counterparts, by excluding stock-based compensation, employer payroll taxes, amortization of acquired intangible assets, and acquisition-related compensation Non-GAAP Operating Expenses (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Non-GAAP Research and Development Expenses | $53,924 | $41,804 | | Non-GAAP Sales and Marketing Expenses | $103,793 | $98,083 | | Non-GAAP General and Administrative Expenses | $28,414 | $24,640 | | Non-GAAP Restructuring Expenses | $0 | $0 | Operating Income (Loss) and Margin Reconciliation Non-GAAP operating income for Q2 FY26 was $5.376 million, a significant improvement from a non-GAAP operating loss of $6.359 million in Q2 FY25, achieving a positive non-GAAP operating margin of 2% Non-GAAP Operating Income (Loss) (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | Change | | :------------------------ | :----- | :----- | :----- | | GAAP Operating Loss | $(80,618) | $(79,381) | -$1,237 | | Non-GAAP Operating Income (Loss) | $5,376 | $(6,359) | +$11,735 | Non-GAAP Operating Margin (Three Months Ended July 31) | Metric | 2025 | 2024 | Change | | :-------------------- | :--- | :--- | :--- | | GAAP Operating Margin | (33)% | (40)% | +7 pp | | Non-GAAP Operating Margin | 2% | (3)% | +5 pp | Net Income (Loss) and Margin Reconciliation Non-GAAP net income for Q2 FY26 was $13.18 million, a substantial increase from $3.492 million in Q2 FY25, achieving a non-GAAP net income margin of 5% Non-GAAP Net Income (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | Change | | :-------------------- | :----- | :----- | :----- | | GAAP Net Loss | $(72,019) | $(69,184) | -$2,835 | | Non-GAAP Net Income | $13,180 | $3,492 | +$9,688 | Non-GAAP Net Income Margin (Three Months Ended July 31) | Metric | 2025 | 2024 | Change | | :-------------------- | :--- | :--- | :--- | | GAAP Net Loss Margin | (30)% | (35)% | +5 pp | | Non-GAAP Net Income Margin | 5% | 2% | +3 pp | Diluted EPS Reconciliation Non-GAAP diluted EPS for Q2 FY26 improved to $0.04 from $0.01 in Q2 FY25, reflecting the company's enhanced non-GAAP profitability Non-GAAP Diluted EPS (Three Months Ended July 31) | Metric | 2025 | 2024 | Change | | :-------------------------- | :--- | :--- | :--- | | GAAP Net Loss Per Share | $(0.22) | $(0.22) | $0.00 | | Non-GAAP Net Income Per Share | $0.04 | $0.01 | +$0.03 | Selected Cash Flow Information and Free Cash Flow Reconciliation For the three months ended July 31, 2025, free cash flow was negative $7.148 million, a slight increase in outflow year-over-year, while for the six months ended July 31, 2025, free cash flow was positive $38.296 million, a significant increase from $28.32 million in the prior year Free Cash Flow (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | Change | | :-------------------- | :----- | :----- | :----- | | Free Cash Flow | $(7,148) | $(5,436) | -$1,712 | | Free Cash Flow Margin | (3)% | (3)% | 0 pp | Free Cash Flow (Six Months Ended July 31, in thousands) | Metric | 2025 | 2024 | Change | | :-------------------- | :----- | :----- | :----- | | Free Cash Flow | $38,296 | $28,320 | +$9,976 | | Free Cash Flow Margin | 8% | 7% | +1 pp | Corporate and Legal Information This section provides details on the upcoming earnings webcast and standard disclaimers regarding forward-looking statements Webcast Information SentinelOne will host a live audio webcast on August 28, 2025, to discuss Q2 FY26 earnings and outlook, with details and recordings available on the investor relations website - A live audio webcast for Q2 FY26 earnings and outlook will be held on August 28, 2025, at 1:30 PM PT (4:30 PM ET)[8] - The webcast and its recording will be available on investors.sentinelone.com[8] Forward-Looking Statements This section contains a standard disclaimer regarding forward-looking statements, emphasizing risks and uncertainties that could cause actual results to differ materially from projections, advising investors to exercise caution and not to place undue reliance on these statements - The press release contains forward-looking statements subject to risks and uncertainties, including future growth, financial performance, and market trends[10] - Numerous factors, such as limited operating history, intense competition, and macroeconomic conditions, could cause actual results to differ materially from statements[11][12] - Investors should not place undue reliance on these statements, and the company undertakes no obligation to update forward-looking statements unless legally required[14]