Cybersecurity provider SentinelOne Inc. has revealed new details about its upcoming initial public offering, disclosing today that the listing could value it at more than $7 billion.

To achieve that market capitalization, SentinelOne would need to price its shares in the high end of its target range for the IPO, which the company has set at $26 to $29 per share.

SentinelOne provides a so-called extended detection and response or XDR platform that spots malware in organizations’ systems. The platform includes machine learning algorithms that can identify breaches across cloud environments, employee endpoints and connected devices. A browser-based console allows cybersecurity teams to revert compromised systems detected by SentinelOne to an earlier, secure state with the click of a mouse. 

The $7 billion-plus valuation SentinelOne could achieve by reaching the top end of its range would provide a major return on investment for the company’s backers. In late 2020, Tiger Global, Sequoia, Insight Partners and Third Point Ventures signed off on a $267 million funding round for the cybersecurity provider at a $3 billion valuation, less than half what it’s eyeing to achieve in the IPO. Earlier in 2020, a consortium that included many of the same investors bought a $200 million stake in the startup at a $1.1 billion valuation.

The IPO could also provide a big windfall for SentinelOne itself. The company is hoping to sell 32 million shares, which would be worth a combined $928 million at the top end of the price range. The IPO underwriters have the option to buy another 4.8 million shares, while existing investors Tiger Global, Insight Venture Partners, Third Point Ventures and Sequoia Capital have agreed to buy $50 million worth of shares.

SentinelOne said in its IPO filing that part of the proceedings from the listing may go to acquisitions. “We intend to complement our organic investments with acquisitions to successfully execute on our XDR strategy,” the company told prospective investors. Additionally, SentinelOne said, it intends to invest in growing its international presence and expanding alliances with channel partners. 

“We also expect our operating expenses to increase in the future as we continue to invest for our future growth, including expanding our research and development function to drive further development of our platform, expanding our sales and marketing activities, developing the functionality to expand into adjacent markets, and reaching customers in new geographic locations,” the IPO filing stated.

SentinelOne is currently operating at a $160 million annual revenue run-rate and more than doubled sales in the quarter ended April 30. Like other fast-growing enterprise software firms, the company is not yet profitable. SentinelOne’s quarterly loss rose to $62.6 million in the three months through April 30.

The company’s recent revenue expansion is the result of a significant increase in its market presence. SentinelOne had more than 4,700 customers as of April 30, up from 2,700 a year earlier, and larger rival CrowdStrike Holdings Inc. listed the company as a competitor for the first time in its most recent annual financial report. 

“Many of our competitors have greater financial, technical, marketing, sales, and other resources, greater name recognition, longer operating histories, and a larger base of customers,” SentinelOne noted in its IPO filing. Besides providing more working capital for expenses such as acquisitions, the IPO should help the company put itself on a more even playing field with its bigger competitors by giving it access to capital markets.

The market capitalization of rival CrowdStrike has nearly quadrupled since its public offering in 2019. If SentinelOne sustains the momentum that helped it more than double revenues during the three months ended April 30, investors may similarly reward the company with a share price increase in the quarters after the listing. A share price jump of the kind experienced by CrowdStrike would enable SentinelOne to raise larger amounts of capital, as well as give it the ability to make bigger acquisitions by using its stock as currency.

SentinelOne will list on the New York Stock Exchange under the ticker symbol “S.” Morgan Stanley and Goldman Sachs are the lead underwriters for the IPO.

Photo: SentinelOne