SentinelOne (S) Q2 2026 Earnings Call August 28, 2025 04:30 PM ET Company ParticipantsSaad Nazir - Head - IRTomer Weingarten - Co-Founder, Chairman, President & CEOBarbara Larson - CFOJohn DiFucci - Senior Managing DirectorBrad Zelnick - MD - Software Equity ResearchJoseph Gallo - SVPBrian Essex - Executive DirectorIttai Kidron - Managing DirectorShaul Eyal - Managing Director - Equity ResearchRoger Boyd - Executive DirectorYun Kim - Managing DirectorGabriela Borges - MD - Software ResearchConference Call P ...

Financial Data and Key Metrics Changes - The total Annual Recurring Revenue (ARR) grew by 24% and surpassed $1 billion, marking a significant milestone for the company [6][34] - Revenue increased by 22% year over year to $242 million, with international markets growing by 27% and representing 38% of total revenue [35] - The net retention rate remains strong, driven by customer adoption of broader platform solutions, including data, cloud, and Purple AI [36] - Gross margin was maintained at 79%, with operating profitability of 2% and a positive net income margin of 5% for the quarter [37][38] Business Line Data and Key Metrics Changes - The company achieved record second-quarter net new ARR of $53 million, driven by new customer acquisitions and expansion with existing accounts [6][34] - Approximately half of the quarterly bookings came from non-endpoint solutions, indicating strong growth and diversity in the platform [17] - Purple AI achieved triple-digit growth, with attach rates surpassing 30% of licenses sold during the quarter [18] Market Data and Key Metrics Changes - The company continues to expand its presence in international markets, with a notable increase in revenue contribution from these regions [35] - The managed security market is seeing strong traction, with the company being recognized as a valuable vendor in the MSSP ecosystem [14] Company Strategy and Development Direction - The company is focused on delivering AI-powered innovations that unify security, data, and automation, positioning itself as a technology leader in cybersecurity [8][29] - The introduction of SentinelOne Flex is aimed at enhancing customer engagement and driving greater return on security investments [9][10] - The acquisition of Prompt Security is a strategic move to secure generative AI usage and enhance the Singularity platform [23][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong demand for the Singularity platform, despite being mindful of evolving macro conditions that could influence deal timing [41] - The company raised its full-year revenue outlook while maintaining prudent assumptions for the second half of the fiscal year [42][43] - Management emphasized the critical role of security in enabling AI adoption, stating that AI's promise cannot be realized without security [47][48] Other Important Information - The company ended the quarter with $1.2 billion in cash and no debt, providing flexibility for strategic capital allocation [39] - Remaining performance obligations grew by 26% to $1.2 billion, reflecting customer trust and commitment to innovation [38] Q&A Session Summary Question: Can you provide insights on the expansion of the Singularity platform? - Management noted that both new logos and expansion with existing customers contributed to strong performance, with significant growth in endpoint and emerging solutions like AI, data, and cloud [54][56] Question: What guidance can you provide for net new ARR in Q3? - Management indicated that while formal ARR guidance is not provided, the improved Q2 results imply a positive outlook for net new ARR for the full year [59] Question: How is the Flex model impacting customer adoption? - The Flex model has been well-received, allowing customers to adopt more of the platform's capabilities and driving consumption across various modules [63][64] Question: What are the expectations for the Prompt acquisition? - Management believes that Prompt will significantly contribute to the company's growth by addressing the governance and control needs associated with generative AI usage [70] Question: Can you elaborate on the U.S. versus international revenue mix? - International revenue accounted for 38% of total revenue, showing strong performance and growth compared to previous quarters [92] Question: How is the partnership momentum progressing? - Management reported positive traction with partnerships, particularly with Lenovo, contributing to the overall growth outlook [98]

Financial Data and Key Metrics Changes - The company achieved a revenue growth of 32% year-over-year, reaching $821 million, with gross margin at a new high and operating margin improving by 16 percentage points year-over-year [36][37] - In Q4, revenue was $226 million, growing 29% year-over-year, exceeding expectations [38] - The company crossed significant profitability milestones, including a positive net income margin of 2% and a positive free cash flow margin of 1% for the full year [37] Business Line Data and Key Metrics Changes - The company re-accelerated net new ARR growth in the second half of the year, achieving 2% growth, an improvement of 12 percentage points compared to the first half [38] - Non-endpoint solutions accounted for over 50% of full-year bookings, indicating a successful transition to a comprehensive AI-native cybersecurity platform [8][20] - The fastest-growing solutions were data and AI, with significant contributions from the AI SIEM product [21][90] Market Data and Key Metrics Changes - International revenue grew 36%, representing 37% of quarterly revenue [38] - The company is now protecting over 14,000 direct customers, excluding those served by strategic partners [39] - The company reported a record RPO growth of 30%, reaching $1.2 billion [40] Company Strategy and Development Direction - The company aims to surpass $1 billion in both ARR and revenue in the upcoming fiscal year, focusing on execution and advancing its Singularity platform [9][33] - The strategy includes a shift towards AI-native data and security solutions, with a commitment to operational discipline and efficiency [48][32] - The company is retiring its legacy Deception solution to realign resources towards higher-yielding elements of the business [45][83] Management's Comments on Operating Environment and Future Outlook - The management noted that the cybersecurity landscape is increasingly challenging, with more breaches and costs than ever before, necessitating a modern approach to security [10][11] - The company remains optimistic about its growth trajectory, despite macroeconomic uncertainties, and expects to maintain strong execution and deeper engagements across its partner ecosystem [33][44] - Management highlighted the importance of AI in driving future growth and the need to adapt to evolving software and technology landscapes [32][74] Other Important Information - The company achieved its first quarter of positive operating margin in Q4, outperforming prior guidance by over 400 basis points [41] - The company expects to maintain industry-leading gross margins while growing its customer base [46] - The company has over $1.1 billion in cash and cash equivalents, providing flexibility for investments [47] Q&A Session Summary Question: What is the expected contribution from Lenovo? - The company is working closely with Lenovo and expects a more significant impact in the next fiscal year as shipments ramp up [51] Question: Are there any material changes in guidance philosophy? - The company is focused on setting reasonable expectations based on pipeline activity and market conditions, which remain volatile [54][55] Question: What is the outlook for federal government exposure? - The federal pipeline has expanded, and the company is well-positioned to cater to federal agencies, especially with AI capabilities [78][80] Question: What is driving the decision to retire the Deception solution? - The legacy code base and increasing maintenance costs led to the decision, allowing the company to focus on higher-yielding business elements [83][84] Question: What are the key growth drivers in the emerging product portfolio? - AI SIM and Purple AI have been significant growth drivers, with strong adoption and strategic importance for customers [90]