SentinelOne Inc (S) Q1 2026 Earnings Call Highlights: Strong Revenue Growth and Strategic ...
Revenue: $229 million, a growth of 23% year-over-year.
International Revenue Growth: 27%, representing 38% of quarterly revenue.
Total ARR: $948 million, a growth of 24% year-over-year.
Customers with ARR of $100,000 or more: Grew 22% to 1,459.
Gross Margin: 79%.
Operating Margin: Expanded over 4 percentage points year-over-year to negative 2%.
Free Cash Flow Margin: Record 20% for the quarter.
Q2 Revenue Guidance: Approximately $242 million, growth of 22%.
Full Year Revenue Guidance: $996 million to $1.1 billion, representing 22% growth.
Q2 Gross Margin Guidance: Approximately 79%.
Full Year Gross Margin Guidance: Between 78.5% and 79.5%.
Q2 Operating Margin Guidance: Breakeven, implying a year-over-year improvement of approximately 300 basis points.
Full Year Operating Margin Guidance: Between positive 3% and 4%, an improvement of over 650 basis points at the midpoint compared to fiscal year '25.
Share Repurchase Authorization: $200 million open-ended.
Warning! GuruFocus has detected 3 Warning Sign with S.
Release Date: May 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
SentinelOne Inc (NYSE:S) exceeded revenue growth expectations with a 23% increase and achieved a record free cash flow margin of 20%.
The company expanded its customer base and drove platform adoption across AI, cloud, data, and endpoint, with Purple AI achieving triple-digit year-over-year growth in quarterly bookings.
SentinelOne Inc (NYSE:S) introduced a unified cloud security suite, enhancing real-time defense and operations, which gained strong traction among cloud security opportunities.
The company's data solutions surpassed $100 million in ARR, highlighting the momentum of its AI SIEM offering and increasing preference for its modern AI-driven cloud-native data solution.
SentinelOne Inc (NYSE:S) achieved FedRAMP high authorization for multiple solutions, including Purple AI, marking it as the first cybersecurity agentic AI solution approved for US government organizations.
The company observed elongated sales cycles due to macroeconomic uncertainty, impacting Q1 net new ARR.
SentinelOne Inc (NYSE:S) took a more measured stance on full-year growth assumptions due to potential macro volatility.
Despite strong demand, the company experienced slip deals in Q1, attributed to macro volatility rather than competitive pressures.
The guidance for the full fiscal year 2026 was slightly reduced, reflecting a decrease in internal expectations around net new ARR.
The company noted that the federal sector faced longer sales cycles and more approval requirements, affecting deal timelines.
Q: Can you discuss the incremental ARR in the quarter and what gives you confidence that the decline is macro-related and not competitive? A: Tomer Weingarten, CEO: We observed improved trends in May and expect year-over-year net growth in Q2 to improve relative to Q1. The decline was mainly due to slip deals rather than elevated churn, which was in line with expectations. The macro volatility in Q1 was unexpected, but fundamentals remain intact with strong demand and pipeline.
Q: Can you elaborate on the guidance assumptions and whether the April trends are expected to persist throughout the year? A: Barbara Larson, CFO: Our outlook reflects new business growth throughout the year. We saw improved trends in May and are being cautious about potential external disruptions. The revenue guide was decreased by 1%, indicating a slight reduction in internal expectations for net new ARR.
Q: What specific feedback did you receive from customers regarding the slip deals, and do you expect these deals to close in the July quarter? A: Tomer Weingarten, CEO: The macro backdrop changed unexpectedly in Q1, leading to longer sales cycles and paused spending decisions. We haven't seen deal cancellations, and we expect 22% growth this year. Trends improved in May, with strong demand and win rates, but we are cautious about potential disruptions.
Q: Can you discuss the progression of productivity and bundle sales, and whether elongated sales cycles were more pronounced in certain regions or verticals? A: Tomer Weingarten, CEO: The elongated sales cycles were more pronounced in larger deals and globally, but mid-market remained strong. Our platform's breadth and depth are significant, and we're making it more flexible for customers. Our AI and data business are major growth drivers, and we expect meaningful accretion from changing our bundling structure.
Q: How do you view the SIEM market, and what is the pipeline for competitive displacements? A: Tomer Weingarten, CEO: The SIEM market is seeing augmentation and net new data storage needs. Our AI SIEM allows customers to unify data without migration, addressing real-time threat detection needs. There's growing interest in cloud-native SIEM solutions due to cost benefits and real-time capabilities, which legacy providers struggle with.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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