UPDATED 18:29 EST / DECEMBER 05 2023


SentinelOne shares surge on strong quarterly results and upbeat forecast

Shares in SentinelOne Inc. jumped more than 17% in after-hours trading today after the cybersecurity company delivered beats in earnings and revenue in its fiscal third quarter and forecast a better-than-expected outlook for its fourth quarter.

For the quarter that ended on Oct. 31, SentinelOne reported an adjusted loss per share of three cents, down from a loss of 16 cents per share in the same quarter of last year, on revenue of $164.2 million, up 42% year-over-year. Both were solid beats, as analysts had expected a loss per share of eight cents on revenue of $156.09 million.

SentinelOne’s stronger-than-expected figures were driven by customer growth. The company had more than 11,500 customers as of the end of the quarter, up from 9,250 as of the end of October last year, and new customers with annual recurring revenue of more than $100,000 grew 33% over the same period. Annual recurring revenue overall rose 43%, to $663.9 million, and SentinelOne is keeping its customers, with a dollar-based net retention revenue rate of over 115%.

The company’s adjusted operating margin also saw significant improvement in the quarter, coming in at negative 11% versus negative 43% a year prior. SentinelOne had $1.1 billion in cash, cash equivalents and investments on hand as of the end of October.

Recent business highlights include SentinelOne announcing a new partnership with Snyk Ltd. on Nov. 9 that integrates SentinelOne’s cloud workload protection platform, Singularity Cloud Workload Security, with the Snyk Developer Security Platform.

The integration will correlate cloud runtime threat detections identified by SentinelOne with vulnerabilities found by Snyk in container images. That’s intended to enable application security and developer teams to collaborate and address the root causes of these issues more effectively.

“Our third-quarter performance exceeded our top- and bottom-line expectations, delivering industry-leading growth and margin improvement,” Chief Executive Tomer Weingarten said in the company’s earnings release.

There was more manna for investors in the outlook, with SentinelOne forecasting $169 million in revenue in its fiscal 2024 fourth quarter and $616 million for the full fiscal year. Both were solidly ahead of analysts’ consensus estimates of $166.5 million and $605.66 million.

The company does face some challenges, however, according to Jordan Berger, an analyst at the research firm Third Bridge.

“Underlying SentinelOne’s growth deceleration in FY2023, there remains a greater question surrounding sales challenges the company is facing in the wake of macroeconomic factors and an increasingly competitive market for endpoint protection and cloud security solutions,” he told SiliconANGLE. “We hear from experts that while SentinelOne’s core XDR product remains highly competitive, the company’s intention to expand into adjacent and equally competitive cybersecurity markets is challenging. Net revenue retention in Q3 FY24 was sequentially stable at 115%, but its decline from recent levels of over 130% indicates that the company’s platform story still needs time to gain traction.”

Image: SentinelOne

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