Core Insights - SentinelOne, Inc. reported first-quarter fiscal 2026 results with adjusted earnings meeting estimates and total revenues slightly exceeding expectations, showing year-over-year growth in both metrics [1][4]. Financial Performance - Adjusted earnings per share (EPS) for the quarter was two cents, matching the Zacks Consensus Estimate, compared to a break-even adjusted EPS in the same period last year [4]. - Total revenues reached $229.03 million, marginally surpassing the consensus mark of $229 million by 0.4% and reflecting a year-over-year growth of 22.9%, driven by increased sales to new customers and additional licenses to existing customers [5]. - Annualized recurring revenues (ARR) grew 24% year over year to $948.1 million as of April 30, 2025 [5]. Operating Highlights - Adjusted gross profit for the quarter was 79%, consistent with the previous year, while the adjusted operating margin improved to a negative 2% from a negative 6% year over year [6]. - Total operating expenses increased by 19.9% year over year to $260 million, attributed to higher research and development, sales and marketing, and general and administrative expenses, along with a one-time restructuring expense [6]. Future Outlook - The company anticipates fiscal second-quarter revenues to be approximately $242 million, indicating a year-over-year growth of 21.7% [9]. - For fiscal 2026, revenues are now projected between $996 million and $1,001 million, a reduction from the previous forecast of $1,007-$1,012 million, compared to $821.5 million reported in fiscal 2025 [10]. - Full-year adjusted gross margin is expected to remain between 78.5% and 79.5%, while the adjusted operating margin is projected to be in the range of 3-4%, an improvement from the negative 3% reported in fiscal 2025 [11]. Strategic Initiatives - The company has initiated a share repurchase authorization program, with the board approving $200 million for share repurchases, to be executed based on market conditions and regulatory requirements [8].

Core Insights - SentinelOne reported quarterly earnings of $0.02 per share, matching the Zacks Consensus Estimate, compared to break-even earnings per share a year ago [1] - The company posted revenues of $229.03 million for the quarter ended April 2025, exceeding the Zacks Consensus Estimate by 0.44% and up from $186.35 million year-over-year [2] - The stock has underperformed, losing about 9.6% since the beginning of the year, while the S&P 500 gained 0.7% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.03 on revenues of $245.47 million, and for the current fiscal year, it is $0.19 on revenues of $1.01 billion [7] - The estimate revisions trend for SentinelOne is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Security industry, to which SentinelOne belongs, is currently ranked in the top 13% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Another competitor in the same industry, CrowdStrike Holdings, is expected to report quarterly earnings of $0.66 per share, reflecting a year-over-year decline of 29%, with revenues anticipated to be $1.1 billion, up 19.9% from the previous year [9][10]

Financial Data and Key Metrics Changes - The company reported revenue of $229 million for Q1, representing a 23% year-over-year growth [27] - Total Annual Recurring Revenue (ARR) grew 24% to $948 million [28] - The gross margin maintained at 79%, with an operating margin improvement to negative 2% [30] - Free cash flow margin reached a record 20%, with cash and investments increasing to $1.2 billion [36] Business Line Data and Key Metrics Changes - Revenue from international markets grew 27%, accounting for 38% of total revenue [28] - Customers with ARR of $100,000 or more increased by 22% to 1,459 [29] - The data solutions segment surpassed $100 million in ARR [10] Market Data and Key Metrics Changes - The company observed elongated sales cycles due to macroeconomic uncertainty, impacting Q1 net new ARR [20] - Despite challenges, win rates remained strong, and no project cancellations were reported [20][42] 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 [24][75] - Recent innovations include the unified cloud security suite and advancements in AI capabilities, which are expected to drive future growth [9][17] - The company achieved FedRAMP high authorization for several products, enhancing its competitive position in the public sector [14][15] 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 typical seasonal growth [41][47] - The company remains cautious about macroeconomic conditions but is optimistic about the strength of its pipeline and demand [52][53] Other Important Information - The company announced a $200 million open-ended share repurchase authorization, reflecting confidence in its long-term trajectory [36][37] - The company is committed to investing in AI-driven innovations and operational efficiencies to support sustainable growth [34][82] Q&A Session Summary Question: Can you discuss 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 and deal slips rather than elevated churn [41][42] Question: Can you clarify guidance assumptions? - Management acknowledged improved trends in May and indicated that the guidance reflects underlying new business growth while being mindful of potential external disruptions [47][48] Question: What are customers saying about slip deals? - Management noted that longer sales cycles were observed, particularly in April, but emphasized that no deal cancellations occurred and that demand remains strong [51][52] Question: How is the productivity and bundling sale progressing? - Management highlighted that the breadth of the platform is significant and that introducing flexible procurement options is expected to drive adoption [58][59] Question: What is the outlook for the SIEM market? - Management noted that there is increasing interest in cloud-native SIEM solutions and that the company is well-positioned to address real-time threats with its AI capabilities [62][64] Question: What are the hiring plans for fiscal 2026? - Management indicated that most hiring will be in R&D, with a focus on product development and sales aligned with growth areas [105][106] Question: What is the status of federal engagements? - Management reported promising growth opportunities in the federal sector, despite longer sales cycles and evolving procurement processes [109][110]

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]

Industry Overview - The cybersecurity market is projected to witness a CAGR of 12.9% from 2025 to 2030, driven by increasing digital threats and the need for advanced cybersecurity solutions [3] - The rise in cloud deployment, digital transformation, and the proliferation of smart and IoT devices has led to more sophisticated cyberattacks, necessitating enhanced cybersecurity measures [2] Company Analysis: BlackBerry Limited (BB) - BlackBerry has shifted its focus from smartphones to cybersecurity and IoT solutions, with its Secure Communications division including products like Unified Endpoint Management (UEM) and SecuSUITE [4] - In fiscal Q4, BlackBerry's Secure Communications revenue reached $67.3 million, exceeding forecasts, driven by strong performance in AtHoc and UEM solutions [5] - The company has established strong relationships with government agencies, securing a stable revenue stream and credibility in high-trust sectors [6] - BlackBerry has successfully cut approximately $150 million from its run rate and reported an adjusted EBITDA of $39.3 million for fiscal 2025, marking a significant improvement [8] - The expansion of contracts with the Malaysian government enhances BlackBerry's revenue potential and positions its Secure Communications division as a key contributor to overall EBITDA [7] Company Analysis: CrowdStrike Holdings, Inc. (CRWD) - CrowdStrike is a leader in next-generation endpoint protection and has introduced new solutions like Falcon Data Protection to address data security concerns [9] - The company's subscription revenues reached $1.01 billion, reflecting a 27% increase year-over-year, aided by the Falcon Flex Subscription Model [10] - Despite strong growth, CrowdStrike faces challenges due to customer sentiment issues following a global IT outage and has implemented a Customer Commitment Package to retain clients [11] - The company has significantly increased its sales and marketing expenses, which rose nearly ninefold to $1.52 billion in fiscal 2025, alongside a focus on R&D [12][13] Performance Comparison - Over the past month, BlackBerry and CrowdStrike have seen stock gains of 10.5% and 7.6%, respectively [16] - BlackBerry's forward 12-month Price/Sales ratio is 4.21X, significantly lower than CrowdStrike's 22.17X, indicating a more favorable valuation for BlackBerry [17] - Analysts have raised BlackBerry's earnings estimates for the current fiscal year, while CrowdStrike has seen only marginal upward revisions [19][21] Investment Outlook - Both companies are well-positioned to benefit from the growing cybersecurity market, but BlackBerry currently holds a Zacks Rank 1 (Strong Buy), while CrowdStrike has a Zacks Rank 4 (Sell), suggesting BlackBerry may be the better investment choice at this time [22]

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].