SentinelOne, Inc. (S) Earnings & Analysis

Latest quarter

SentinelOne reported Q2 FY2027 revenue of $292.0 million, up 20.6% from $242.2 million a year earlier and above the $290.0 million consensus. Adjusted earnings per share were $0.08, compared with the $0.07 consensus. Revenue also exceeded the company’s own guidance range of $289.0 million to $291.0 million.

The company’s filing attributed revenue growth to new customers and additional licenses and platform solutions sold to existing customers. Annual recurring revenue grew as customers added adjacent platform solutions, the filing said.

Gross margin fell to 72.1% from 75.0%. SentinelOne attributed the decline primarily to higher costs associated with scaling operations, including cloud hosting and customer support. Operating margin was −31.1%, compared with −33.3% a year earlier. The filing also reported restructuring charges related to the May 2026 plan, including severance and equity-award costs.

SentinelOne reported a diluted loss per share of −$0.27, compared with −$0.22 a year earlier. Free cash flow was −$13.3 million, compared with −$7.2 million in the prior-year quarter.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Tomer Weingarten said customers were consolidating security products on SentinelOne’s platform, and that competitive win rates rose both sequentially and year over year. He described an aerospace and defense customer replacing an incumbent and adopting endpoint, data, cloud and AI security products.

Weingarten said annual recurring revenue from Prompt and Purple AI increased year over year in Q2. He also said ARR growth accelerated in data and cloud security. SentinelOne Flex, which lets customers add capabilities across the platform, had exceeded 10% of total ARR within a year of launch, he said.

CFO Sonalee Parekh said net retention among customers spending at least $100,000 in ARR increased year over year and sequentially. She attributed the improvement to adoption of multiple products and a growing contribution from AI products. In the Q&A, Weingarten said sales cycles were compressing and contracts were getting longer.

Asked about remaining performance obligations, Parekh said the total reached $1.7 billion, up 45.0%. Larger deals and longer contract durations contributed to the acceleration, she said. Weingarten added that a focus on larger deals meant adding fewer customers per quarter.

On margins, Parekh said sales and marketing spending had declined as a share of revenue while sales productivity improved. She told analysts that SentinelOne had removed organizational complexity and redeployed resources toward growth opportunities, including AI security, data and cloud. Parekh said the outlook also left room for investment in products, sales efforts and partner channels.

Parekh said margins should improve sequentially in Q3 and Q4, although not at the same rate as before. On net new ARR, she told analysts: “we do expect for the full year for net new ARR to grow year over year.”

Guidance

SentinelOne raised its FY2027 revenue outlook. CFO Sonalee Parekh also said the company raised its full-year non-GAAP operating income outlook to $124.0 million to $128.0 million. She said the updated outlook reflected demand, platform adoption and retention trends.