SentinelOne reports significant growth & first positive profits

SentinelOne has reported its financial results for the second quarter of the fiscal year 2025, which ended on 31 July 2024. This marks the company's 12th consecutive quarter of double-digit percentage points of year-over-year operating margin improvement.

During the period, SentinelOne generated revenue of USD $199 million, a 33% increase from the USD $149 million achieved in the first quarter of fiscal year 2024. The company also reported an annualised recurring revenue (ARR) of USD $806 million, reflecting a 32% growth from the previous figure of USD $612 million.

Significantly, SentinelOne reported its first-ever quarter of positive net income and earnings per share. Addressing this achievement, CEO Tomer Weingarten stated, "Based on strong execution and broad-based demand, SentinelOne delivered exceptional results with industry-leading growth and our first-ever quarter of positive net income and earnings per share. We're seeing a distinct rise in customer interest and appreciation for the advantages of our patented AI-powered Singularity Platform to help build higher quality and more durable cyber defence."

Regarding customer metrics, the number of customers with an ARR of USD $100,000 or more grew by 24%, reaching a total of 1,233. The number of customers with an ARR of USD $1 million or more also reached a new company record.

Gross margins also improved, with GAAP gross margin increasing to 75% from 70% and non-GAAP gross margin rising to 80% from 77%. The non-GAAP gross margin of 80% was notably above the FactSet consensus of 79%.

The operating margins also showed significant improvement. The GAAP operating margin was reported at -40%, compared to -67% previously. Meanwhile, the non-GAAP operating margin improved significantly to -3%, rising 19 percentage points compared to -22%. This was above the FactSet consensus of -6%.

SentinelOne's financial metrics concerning cash flow were also positive. The operating cash flow margin was reported at 1%, compared to -8% previously. The free cash flow margin improved by 7 percentage points to -3% from -10% in the prior quarter.

Dave Bernhardt, CFO of SentinelOne, commented on the results: "We outperformed on all key metrics, including record margins and profitability. We continue to lead the industry in terms of technology, revenue growth, and margin expansion. Q2 marked our 12th consecutive quarter with a double-digit operating margin improvement. We continue to invest in innovation and scale, which will extend our competitive advantages and reach over time. Based on stronger execution and business momentum, we're raising our revenue outlook for fiscal year '25."

For the fiscal third quarter, SentinelOne has guided for a revenue of USD $209.5 million, aligning with the FactSet consensus of USD $209.4 million. The forecast for the non-GAAP gross margin is set at 79%, slightly above the FactSet consensus of 78.6%. The non-GAAP operating margin is expected at -3%, consistent with the FactSet consensus.

SentinelOne has updated its guidance for the full fiscal year 2025. The company now projects a USD $815 million revenue, implying a 31% year-over-year growth. This is slightly above the previous guidance range of USD $808-815 million and the FactSet consensus of USD $813 million. The non-GAAP gross margin is forecasted to be between 78-79%, with an expected non-GAAP operating margin ranging between -5% and -3%, aligning with FactSet's consensus of -4%.

SentinelOne's financial performance for the second quarter of fiscal year 2025 reflects significant growth and improvement across key metrics, leading to an optimistic outlook for the remainder of the fiscal year.