0001583708FALSE00015837082024-08-272024-08-27
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 27, 2024
SENTINELONE, INC.
(Exact name of registrant as specified in its charter)
_____________________________________________________________________________________________
| | | | | | | | | | | | | | |
| Delaware | | 001-40531 | | 99-0385461 |
(State or other jurisdiction
of incorporation) | | (Commission
File Number) | | (IRS Employer
Identification No.) |
| | | | | | | | |
| 444 Castro Street | |
| Suite 400 | |
| Mountain View | |
| California | |
| 94041 | |
| (Address, including zip code, of principal executive offices) | |
Registrant’s telephone number, including area code: (855) 868-3733
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| | | | | | | | | | | | | | | | | |
| | | | | |
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
| | | | |
| Title of each class | | Trading
Symbol(s) | | Name of each exchange on which registered |
| Class A common stock, par value $0.0001 | | S | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
| | | | | |
| Emerging growth company | ☐ |
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
Item 2.02 Results of Operations and Financial Condition.
On August 27, 2024, SentinelOne, Inc. (the “Company”) announced its financial results for the second quarter of fiscal year 2025 ended July 31, 2024, by issuing a letter to shareholders and a press release. The Company also announced that it would hold a webcast to discuss its financial results for the second quarter of fiscal year 2025 ended July 31, 2024. A copy of the press release and the letter to shareholders is furnished herewith as Exhibit 99.1 and 99.2, respectively.
The Company makes reference to non-GAAP financial information in the Company’s press release, letter to shareholders and the webcast call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release and letter to shareholders.
The information contained herein and in the accompanying exhibits are “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.
Item 7.01 Regulation FD Disclosure.
On August 27, 2024, the Company posted supplemental investor materials on the Investors Relations section of its website, available at investors.sentinelone.com. The Company announces material information to the public through filings with the Securities and Exchange Commission, the investor relations page on the Company’s website, press releases, public conference calls, webcasts, the Company’s news website, available at sentinelone.com/press and blog posts on the Company’s corporate website at sentinelone.com/blog in order to achieve broad, non-exclusionary distribution of information to the public and for complying with its disclosure obligations under Regulation FD.
The information disclosed by the foregoing channels could be deemed to be material information. As such, the Company encourages investors, the media and others to follow the channels listed above and to review the information disclosed through such channels.
Any updates to the list of disclosure channels through which the Company announces information will be posted on the investor relations page on the Company’s website.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| | | | | | | | |
| Exhibit Number | | Exhibit Description |
| | |
| | |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | | | | | | | | | | | | |
| | SENTINELONE, INC. | |
| | | | |
Date: August 27, 2024 | | By: | /s/ David Bernhardt | |
| | | David Bernhardt | |
| | | Chief Financial Officer | |
Exhibit 99.1
SentinelOne Announces Second Quarter Fiscal Year 2025 Financial Results
Revenue increased 33% year-over-year
ARR up 32% year-over-year
MOUNTAIN VIEW, Calif. August 27, 2024 SentinelOne, Inc. (NYSE: S) today announced financial results for the second quarter of fiscal year 2025 ended July 31, 2024.
“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,” said Tomer Weingarten, CEO of SentinelOne. “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 defense. We remain committed to an open ecosystem platform, superior technology, and earning customer trust through transparency.”
“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 double digit operating margin improvement,” said Dave Bernhardt, CFO of SentinelOne. “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.”
Letter to Shareholders
We have published a letter to shareholders on the Investor Relations section of our website at investors.sentinelone.com. The letter provides further discussion of our results for the second quarter of fiscal year 2025 as well as the financial outlook for our fiscal third quarter and full fiscal year 2025.
Second Quarter Fiscal Year 2025 Highlights
(All metrics are compared to the second quarter of fiscal year 2024 unless otherwise noted)
•Total revenue increased 33% to $198.9 million, compared to $149.4 million.
•Annualized recurring revenue (ARR) increased 32% to $806.0 million as of July 31, 2024.
•Customers with ARR of $100,000 or more grew 24% to 1,233 as of July 31, 2024.
•Gross margin: GAAP gross margin was 75%, compared to 70%. Non-GAAP gross margin was 80%, compared to 77%.
•Operating margin: GAAP operating margin was (40)%, compared to (67)%. Non-GAAP operating margin was (3)%, compared to (22)%.
•Cash flow margin: Operating cash flow margin was 1%, compared to (8)%. Free cash flow margin was (3)%, 7 percentage points higher compared to (10)%.
•Cash, cash equivalents, and investments were $1.1 billion as of July 31, 2024.
Financial Outlook
We are providing the following guidance for the third quarter of fiscal year 2025, and for fiscal year 2025 (ending January 31, 2025).
| | | | | | | | | | | | | | |
| Q3FY25
Guidance | | Full FY2025
Guidance |
| Revenue | $209.5 million | | $815 million |
| Non-GAAP gross margin | 79% | | 79% |
| Non-GAAP operating margin | (3)% | | (5)-(3)% |
These statements are forward-looking and actual results may differ materially as a result of many factors. Refer to the below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
Guidance for non-GAAP financial measures excludes stock-based compensation expense, employer payroll tax on employee stock transactions, amortization expense of acquired intangible assets, acquisition-related compensation costs, restructuring charges, and gains and losses on strategic investments. We have not provided the most directly comparable GAAP measures because certain items are out of our control or cannot be reasonably predicted. Accordingly, a reconciliation of non-GAAP gross margin and non-GAAP operating margin is not available without unreasonable effort.
Webcast Information
We will host a live audio webcast for analysts and investors to discuss our earnings results for the second quarter of fiscal year 2025 and outlook for third quarter of fiscal year 2025 and full fiscal year 2025 today, August 27, 2024, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The live webcast and a recording of the event will be available on the Investor Relations section of our website at investors.sentinelone.com.
We have used, and intend to continue to use, the Investor Relations section of our website at investors.sentinelone.com as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve risks and uncertainties, including but not limited to statements regarding our future growth, execution, competitive position, and future financial and operating performance, including our financial outlook for the third quarter of fiscal year 2025 and our full fiscal year 2025, including non-GAAP gross margin and non-GAAP operating margin; progress towards our long-term profitability targets; and general market trends. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negative of these terms and similar expressions are intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words.
There are a significant number of factors that could cause our actual results to differ materially from statements made in this press release, including but not limited to: our limited operating history; our history of losses; intense competition in the market we compete in; fluctuations in our operating results; actual or perceived network or security incidents against us; our ability to successfully integrate any acquisitions and strategic investments; actual or perceived defects, errors or vulnerabilities in our platform; risks associated with managing our rapid growth; general global market, political, economic, and business conditions, including those related to declining global macroeconomic conditions, the upcoming U.S. election, actual or perceived instability in the banking sector, supply chain disruptions, a potential recession, inflation, interest rate volatility, and geopolitical uncertainty, including the
effects of the conflicts in the Middle East and Ukraine; our ability to attract new and retain existing customers, or renew and expand our relationships with them; the ability of our platform to effectively interoperate within our customers' IT infrastructure; disruptions or other business interruptions that affect the availability of our platform including cybersecurity incidents; the failure to timely develop and achieve market acceptance of new products and subscriptions as well as existing products, subscriptions and support offerings; rapidly evolving technological developments in the market for security products and subscription and support offerings; length of sales cycles; and risks of securities class action litigation.
Additional risks and uncertainties that could affect our financial results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our filings and reports with the Securities and Exchange Commission (SEC), including our most recently filed Annual Report on Form 10-K, dated March 27, 2024, subsequent Quarterly Reports on Form 10-Q and other filings and reports that we may file from time to time with the SEC, copies of which are available on our website at investors.sentinelone.com and on the SEC’s website at www.sec.gov.
You should not rely on these forward-looking statements, as actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of such risks and uncertainties. All forward-looking statements in this press release are based on information and estimates available to us as of the date hereof, and were based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. We do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date of this press release or to reflect new information or the occurrence of unexpected events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
Non-GAAP Financial Measures
In addition to our results being determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, with the financial information presented in accordance with GAAP, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.
Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. In addition, the utility of free cash flow as a measure of our liquidity is limited as it does not represent the total increase or decrease in our cash balance for a given period.
Reconciliations between non-GAAP financial measures to the most directly comparable financial measure stated in accordance with GAAP are contained below. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business.
As presented in the “Reconciliation of GAAP to Non-GAAP Financial Information” table below, each of the non-GAAP financial measures excludes one or more of the following items:
Stock-based compensation expense
Stock-based compensation expense is a non-cash expense that varies in amount from period to period and is dependent on market forces that are often beyond our control. As a result, management excludes this item from our internal operating forecasts and models. Management believes that non-GAAP measures adjusted for stock-based compensation expense provide investors with a basis to measure our core performance against the performance of
other companies without the variability created by stock-based compensation as a result of the variety of equity awards used by other companies and the varying methodologies and assumptions used.
Employer payroll tax on employee stock transactions
Employer payroll tax expenses related to employee stock transactions are tied to the vesting or exercise of underlying equity awards and the price of our common stock at the time of vesting, which varies in amount from period to period and is dependent on market forces that are often beyond our control. As a result, management excludes this item from our internal operating forecasts and models. Management believes that non-GAAP measures adjusted for employer payroll taxes on employee stock transactions provide investors with a basis to measure our core performance against the performance of other companies without the variability created by employer payroll taxes on employee stock transactions as a result of the stock price at the time of employee exercise.
Amortization of acquired intangible assets
Amortization of acquired intangible asset expense is tied to the intangible assets that were acquired in conjunction with acquisitions, which results in non‑cash expenses that may not otherwise have been incurred. Management believes excluding the expense associated with intangible assets from non-GAAP measures allows for a more accurate assessment of our ongoing operations and provides investors with a better comparison of period-over-period operating results.
Acquisition-related compensation costs
Acquisition-related compensation costs include cash-based compensation expenses resulting from the employment retention of certain employees established in accordance with the terms of each acquisition. Acquisition-related cash-based compensation costs have been excluded as they were specifically negotiated as part of the acquisitions in order to retain such employees and relate to cash compensation that was made either in lieu of stock-based compensation or where the grant of stock-based compensation awards was not practicable. In most cases, these acquisition-related compensation costs are not factored into management's evaluation of potential acquisitions or our performance after completion of acquisitions, because they are not related to our core operating performance. In addition, the frequency and amount of such charges can vary significantly based on the size and timing of acquisitions and the maturities of the businesses being acquired. Excluding acquisition-related compensation costs from non-GAAP measures provides investors with a basis to compare our results against those of other companies without the variability caused by purchase accounting.
Restructuring charges
Restructuring charges primarily relate to severance payments, employee benefits, stock-based compensation, and inventory write-offs. These restructuring charges are excluded from non-GAAP financial measures because they are the result of discrete events that are not considered core-operating activities. We believe that it is appropriate to exclude restructuring charges from non-GAAP financial measures because it enables the comparison of period-over-period operating results from continuing operations.
Gains and losses on strategic investments
Gains and losses on strategic investments relate to the subsequent changes in the recorded value of our strategic investments. These gains and losses are excluded from non-GAAP financial measures because they are the result of discrete events that are not considered core-operating activities. We believe that it is appropriate to exclude gains and losses from strategic investments from non-GAAP financial measures because it enables the comparison of period-over-period net income (loss).
Non-GAAP Cost of Revenue, Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Loss from Operations, Non-GAAP Operating Margin, Non-GAAP Net Loss and Non-GAAP Net Loss Per Share
We define these non-GAAP financial measures as their respective GAAP measures, excluding the expenses referenced above. We use these non-GAAP financial measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance.
Free Cash Flow
We define free cash flow as cash provided by (used in) operating activities less purchases of property and equipment and capitalized internal-use software costs. We believe free cash flow is a useful indicator of liquidity that provides our management, board of directors, and investors with information about our future ability to generate or use cash to enhance the strength of our balance sheet and further invest in our business and pursue potential strategic initiatives.
Key Business Metrics
We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.
Annualized Recurring Revenue (ARR)
We believe that ARR is a key operating metric to measure our business because it is driven by our ability to acquire new subscription and consumption and usage-based customers, and to maintain and expand our relationship with existing customers. ARR represents the annualized revenue run rate of our subscription and consumption and usage-based agreements at the end of a reporting period, assuming contracts are renewed on their existing terms for customers that are under contracts with us. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates, usage, renewal rates, and other contractual terms.
Customers with ARR of $100,000 or More
We believe that our ability to increase the number of customers with ARR of $100,000 or more is an indicator of our market penetration and strategic demand for our platform. We define a customer as an entity that has an active subscription for access to our platform. We count Managed Service Providers, Managed Security Service Providers, Managed Detection & Response firms, and Original Equipment Manufacturers, who may purchase our products on behalf of multiple companies, as a single customer. We do not count our reseller or distributor channel partners as customers.
Source: SentinelOne
NYSE: S
Category: Investors
Contact:
Investor Relations:
Doug Clark
investors@sentinelone.com
Press:
Karen Master
karen.master@sentinelone.com
+1 (440) 862-0676
SENTINELONE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
| | | | | | | | | | | |
| July 31, | | January 31, |
| 2024 | | 2024 |
Assets | | | |
Current assets: | | | |
| Cash and cash equivalents | $ | 205,898 | | | $ | 256,651 | |
Short-term investments | 502,274 | | | 669,305 | |
Accounts receivable, net | 155,148 | | | 214,322 | |
Deferred contract acquisition costs, current | 57,355 | | | 54,158 | |
Prepaid expenses and other current assets | 100,601 | | | 102,895 | |
Total current assets | 1,021,276 | | | 1,297,331 | |
Property and equipment, net | 64,257 | | | 48,817 | |
| Operating lease right-of-use assets | 16,535 | | | 18,474 | |
| Long-term investments | 417,161 | | | 204,798 | |
| Deferred contract acquisition costs, non-current | 72,091 | | | 71,640 | |
| Intangible assets, net | 120,307 | | | 122,903 | |
| Goodwill | 629,636 | | | 549,411 | |
| Other assets | 5,856 | | | 8,033 | |
Total assets | $ | 2,347,119 | | | $ | 2,321,407 | |
| Liabilities and Stockholders’ Equity | | | |
Current liabilities: | | | |
| Accounts payable | $ | 6,746 | | | $ | 6,759 | |
Accrued liabilities | 113,315 | | | 104,671 | |
Accrued payroll and benefits | 63,681 | | | 74,345 | |
Operating lease liabilities, current | 4,630 | | | 4,689 | |
| Deferred revenue, current | 399,536 | | | 399,603 | |
Total current liabilities | 587,908 | | | 590,067 | |
| Deferred revenue, non-current | 103,086 | | | 114,930 | |
| Operating lease liabilities, non-current | 15,497 | | | 18,239 | |
| Other liabilities | 6,941 | | | 4,128 | |
Total liabilities | 713,432 | | | 727,364 | |
| Stockholders’ equity: | | | |
Class A common stock | 29 | | | 27 | |
| Class B common stock | 3 | | | 3 | |
| Additional paid-in capital | 3,110,843 | | | 2,934,607 | |
| Accumulated other comprehensive income (loss) | 1,145 | | | (1,550) | |
| Accumulated deficit | (1,478,333) | | | (1,339,044) | |
| Total stockholders’ equity | 1,633,687 | | | 1,594,043 | |
| Total liabilities and stockholders’ equity | $ | 2,347,119 | | | $ | 2,321,407 | |
| | | |
| | |
SENTINELONE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (unaudited) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended July 31, | | Six Months Ended July 31, |
| 2024 | | 2023 | | 2024 | | 2023 |
Revenue | $ | 198,937 | | | $ | 149,421 | | | $ | 385,292 | | | $ | 282,814 | |
Cost of revenue(1) | 50,699 | | | 44,667 | | | 100,836 | | | 87,250 | |
| Gross profit | 148,238 | | | 104,754 | | | 284,456 | | | 195,564 | |
| Operating expenses: | | | | | | | |
Research and development(1) | 63,602 | | | 54,161 | | | 121,923 | | | 109,424 | |
Sales and marketing(1) | 119,617 | | | 98,262 | | | 235,447 | | | 197,433 | |
General and administrative(1) | 44,400 | | | 48,433 | | | 87,067 | | | 100,186 | |
Restructuring(1) | — | | | 4,255 | | | — | | | 4,255 | |
Total operating expenses | 227,619 | | | 205,111 | | | 444,437 | | | 411,298 | |
| Loss from operations | (79,381) | | | (100,357) | | | (159,981) | | | (215,734) | |
| Interest income | 12,853 | | | 11,489 | | | 24,935 | | | 22,024 | |
| Interest expense | (36) | | | (605) | | | (72) | | | (1,212) | |
| Other income (expense), net | (421) | | | 1,409 | | | (460) | | | 1,050 | |
| Loss before income taxes | (66,985) | | | (88,064) | | | (135,578) | | | (193,872) | |
| Provision for income taxes | 2,199 | | | 1,474 | | | 3,711 | | | 2,535 | |
| Net loss | $ | (69,184) | | | $ | (89,538) | | | $ | (139,289) | | | $ | (196,407) | |
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted | $ | (0.22) | | | $ | (0.31) | | | $ | (0.45) | | | $ | (0.68) | |
| Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted | 312,615,531 | | | 293,170,401 | | | 310,358,089 | | | 290,775,910 | |
| | | | | | | |
(1) Includes stock-based compensation expense as follows: | | | | | | | |
| Cost of revenue | $ | 5,564 | | | $ | 4,068 | | | $ | 10,433 | | | $ | 8,241 | |
| Research and development | 20,811 | | | 15,452 | | | 38,276 | | | 30,242 | |
| Sales and marketing | 18,882 | | | 13,681 | | | 36,956 | | | 26,277 | |
| General and administrative | 19,420 | | | 20,705 | | | 37,565 | | | 44,695 | |
| Restructuring | — | | | (1,060) | | | — | | | (1,060) | |
| Total stock-based compensation expense | $ | 64,677 | | | $ | 52,846 | | | $ | 123,230 | | | $ | 108,395 | |
SENTINELONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| | | | | | | | | | | |
| Six Months Ended July 31, |
| 2024 | | 2023 |
| CASH FLOW FROM OPERATING ACTIVITIES: | | | |
| Net loss | $ | (139,289) | | | $ | (196,407) | |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | | | |
| Depreciation and amortization | 21,110 | | | 18,623 | |
| Amortization of deferred contract acquisition costs | 31,252 | | | 22,263 | |
| Non-cash operating lease costs | 1,939 | | | 1,973 | |
| Stock-based compensation expense | 123,230 | | | 108,395 | |
| Accretion of discounts and amortization of premiums on investments, net | (7,420) | | | (11,089) | |
| Net gain on strategic investments | (345) | | | (2,000) | |
| Other | 1,887 | | | 775 | |
| Changes in operating assets and liabilities, net of effects of acquisition | | | |
| Accounts receivable | 59,258 | | | 27,926 | |
| Prepaid expenses and other assets | 8,942 | | | 6,291 | |
| Deferred contract acquisition costs | (34,901) | | | (30,272) | |
| Accounts payable | 10 | | | 1,044 | |
| Accrued liabilities | 5,447 | | | 4,386 | |
| Accrued payroll and benefits | (10,645) | | | (4,393) | |
| Operating lease liabilities | (2,800) | | | (2,434) | |
| Deferred revenue | (12,583) | | | 15,101 | |
| Other liabilities | (789) | | | (144) | |
| Net cash provided by (used in) operating activities | 44,303 | | | (39,962) | |
| CASH FLOW FROM INVESTING ACTIVITIES: | | | |
| Purchases of property and equipment | (1,439) | | | (494) | |
| Purchases of intangible assets | (133) | | | (213) | |
| Capitalization of internal-use software | (14,544) | | | (6,165) | |
| Purchases of investments | (442,629) | | | (350,416) | |
| Sales and maturities of investments | 404,677 | | | 371,996 | |
| Cash paid for acquisitions, net of cash acquired | (61,553) | | | — | |
| Net cash (used in) provided by investing activities | (115,621) | | | 14,708 | |
| CASH FLOW FROM FINANCING ACTIVITIES: | | | |
| Repurchase of early exercised stock options | (21) | | | — | |
| Proceeds from exercise of stock options | 12,813 | | | 13,845 | |
| Proceeds from issuance of common stock under the employee stock purchase plan | 8,800 | | | 6,416 | |
| Net cash provided by financing activities | 21,592 | | | 20,261 | |
| NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | (49,726) | | | (4,993) | |
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH–Beginning of period | 322,086 | | | 202,406 | |
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH–End of period | $ | 272,360 | | | $ | 197,413 | |
SENTINELONE, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(in thousands, except percentages and per share data)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended July 31, | | Six Months Ended July 31, |
| 2024 | | 2023 | | 2024 | | 2023 |
| Cost of revenue reconciliation: | | | | | | | |
| GAAP cost of revenue | $ | 50,699 | | | $ | 44,667 | | | $ | 100,836 | | | $ | 87,250 | |
| Stock-based compensation expense | (5,564) | | | (4,068) | | | (10,433) | | | (8,241) | |
| Employer payroll tax on employee stock transactions | (132) | | | (76) | | | (339) | | | (126) | |
| Amortization of acquired intangible assets | (4,195) | | | (5,139) | | | (9,666) | | | (10,111) | |
| Acquisition-related compensation | (39) | | | (128) | | | (312) | | | (251) | |
| Inventory write-offs due to restructuring | — | | | (720) | | | — | | | (720) | |
| Non-GAAP cost of revenue | $ | 40,769 | | | $ | 34,536 | | | $ | 80,086 | | | $ | 67,801 | |
| | | | | | | |
| Gross profit reconciliation: | | | | | | | |
| GAAP gross profit | $ | 148,238 | | | $ | 104,754 | | | $ | 284,456 | | | $ | 195,564 | |
| Stock-based compensation expense | 5,564 | | | 4,068 | | | 10,433 | | | 8,241 | |
| Employer payroll tax on employee stock transactions | 132 | | | 76 | | | 339 | | | 126 | |
| Amortization of acquired intangible assets | 4,195 | | | 5,139 | | | 9,666 | | | 10,111 | |
| Acquisition-related compensation | 39 | | | 128 | | | 312 | | | 251 | |
| Inventory write-offs due to restructuring | — | | | 720 | | | — | | | 720 | |
| Non-GAAP gross profit | $ | 158,168 | | | $ | 114,885 | | | $ | 305,206 | | | $ | 215,013 | |
| | | | | | | |
| Gross margin reconciliation: | | | | | | | |
| GAAP gross margin | 75 | % | | 70 | % | | 74 | % | | 69 | % |
| Stock-based compensation expense | 3 | % | | 3 | % | | 3 | % | | 3 | % |
| Employer payroll tax on employee stock transactions | — | % | | — | % | | — | % | | — | % |
| Amortization of acquired intangible assets | 2 | % | | 4 | % | | 3 | % | | 4 | % |
| Acquisition-related compensation | — | % | | — | % | | — | % | | — | % |
| Inventory write-offs due to restructuring | — | % | | — | % | | — | % | | — | % |
| Non-GAAP gross margin* | 80 | % | | 77 | % | | 79 | % | | 76 | % |
| | | | | | | |
| Research and development expense reconciliation: | | | | | | | |
| GAAP research and development expense | $ | 63,602 | | | $ | 54,161 | | | $ | 121,923 | | | $ | 109,424 | |
| Stock-based compensation expense | (20,811) | | | (15,452) | | | (38,276) | | | (30,242) | |
| Employer payroll tax on employee stock transactions | (198) | | | (149) | | | (611) | | | (351) | |
| Acquisition-related compensation | (789) | | | (298) | | | (1,576) | | | (623) | |
| Non-GAAP research and development expense | $ | 41,804 | | | $ | 38,262 | | | $ | 81,460 | | | $ | 78,208 | |
| | | | | | | |
| Sales and marketing expense reconciliation: | | | | | | | |
| GAAP sales and marketing expense | $ | 119,617 | | | $ | 98,262 | | | $ | 235,447 | | | $ | 197,433 | |
| Stock-based compensation expense | (18,882) | | | (13,681) | | | (36,956) | | | (26,277) | |
| Employer payroll tax on employee stock transactions | (370) | | | (254) | | | (1,293) | | | (574) | |
SENTINELONE, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(in thousands, except percentages and per share data)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Amortization of acquired intangible assets | (2,253) | | | (1,954) | | | (4,457) | | | (3,861) | |
| Acquisition-related compensation | (29) | | | (164) | | | (73) | | | (413) | |
| Non-GAAP sales and marketing expense | $ | 98,083 | | | $ | 82,209 | | | $ | 192,668 | | | $ | 166,308 | |
| | | | | | | |
| General and administrative expense reconciliation: | | | | | | | |
| GAAP general and administrative expense | $ | 44,400 | | | $ | 48,433 | | | $ | 87,067 | | | $ | 100,186 | |
| Stock-based compensation expense | (19,420) | | | (20,705) | | | (37,565) | | | (44,695) | |
| Employer payroll tax on employee stock transactions | (341) | | | 127 | | | (983) | | | (425) | |
| Amortization of acquired intangible assets | — | | | (1) | | | — | | | (2) | |
| Acquisition-related compensation | 1 | | | (14) | | | — | | | (382) | |
| Non-GAAP general and administrative expense | $ | 24,640 | | | $ | 27,840 | | | $ | 48,519 | | | $ | 54,682 | |
| | | | | | | |
| Restructuring expense reconciliation: | | | | | | | |
| GAAP restructuring expense | $ | — | | | $ | 4,255 | | | $ | — | | | $ | 4,255 | |
| Other restructuring charges | — | | | (5,315) | | | — | | | (5,315) | |
| Stock-based compensation expense | — | | | 1,060 | | | — | | | 1,060 | |
| Non-GAAP restructuring expense | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | |
| Operating loss reconciliation: | | | | | | | |
| GAAP operating loss | $ | (79,381) | | | $ | (100,357) | | | $ | (159,981) | | | $ | (215,734) | |
| Stock-based compensation expense | 64,677 | | | 52,846 | | | 123,230 | | | 108,395 | |
| Employer payroll tax on employee stock transactions | 1,038 | | | 352 | | | 3,226 | | | 1,476 | |
| Amortization of acquired intangible assets | 6,448 | | | 7,093 | | | 14,123 | | | 13,973 | |
| Acquisition-related compensation | 858 | | | 604 | | | 1,961 | | | 1,669 | |
| Inventory write-offs due to restructuring | — | | | 720 | | | — | | | 720 | |
| Other restructuring charges | — | | | 5,315 | | | — | | | 5,315 | |
| Non-GAAP operating loss* | $ | (6,359) | | | $ | (33,427) | | | $ | (17,440) | | | $ | (84,186) | |
| | | | | | | |
| Operating margin reconciliation: | | | | | | | |
| GAAP operating margin | (40) | % | | (67) | % | | (42) | % | | (76) | % |
| Stock-based compensation expense | 33 | % | | 36 | % | | 32 | % | | 38 | % |
| Employer payroll tax on employee stock transactions | 1 | % | | — | % | | 1 | % | | 1 | % |
| Amortization of acquired intangible assets | 3 | % | | 5 | % | | 4 | % | | 5 | % |
| Acquisition-related compensation | — | % | | — | % | | 1 | % | | — | % |
| Inventory write-offs due to restructuring | — | % | | — | % | | — | % | | — | % |
| Other restructuring charges | — | % | | 4 | % | | — | % | | 2 | % |
| Non-GAAP operating margin* | (3) | % | | (22) | % | | (5) | % | | (30) | % |
| | | | | | | |
| Net loss reconciliation: | | | | | | | |
| GAAP net loss | $ | (69,184) | | | $ | (89,538) | | | $ | (139,289) | | | $ | (196,407) | |
| Stock-based compensation expense | 64,677 | | | 52,846 | | | 123,230 | | | 108,395 | |
SENTINELONE, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION (CONTINUED)
(in thousands, except percentages and per share data)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Employer payroll tax on employee stock transactions | 1,038 | | | 352 | | | 3,226 | | | 1,476 | |
| Amortization of acquired intangible assets | 6,448 | | | 7,093 | | | 14,123 | | | 13,973 | |
| Acquisition-related compensation | 858 | | | 604 | | | 1,961 | | | 1,669 | |
| Inventory write-offs due to restructuring | — | | | 720 | | | — | | | 720 | |
| Other restructuring charges | — | | | 5,315 | | | — | | | 5,315 | |
Gain on strategic investments | (345) | | | (2,000) | | | (345) | | | (2,000) | |
| | | | | | | |
| Non-GAAP net income (loss) | $ | 3,492 | | | $ | (24,608) | | | $ | 2,906 | | | $ | (66,859) | |
| | | | | | | |
| Basic EPS: | | | | | | | |
| Weighted-average shares used in computing basic net income (loss) per share (GAAP and Non-GAAP) | 312,615,531 | | | 293,170,401 | | | 310,358,089 | | | 290,775,910 | |
| | | | | | | |
| GAAP basic net loss per share | $ | (0.22) | | | $ | (0.31) | | | $ | (0.45) | | | $ | (0.68) | |
| | | | | | | |
| Non-GAAP basic net income (loss) per share | $ | 0.01 | | | $ | (0.08) | | | $ | 0.01 | | | $ | (0.23) | |
| | | | | | | |
| Diluted EPS reconciliation: | | | | | | | |
| GAAP net loss per share, basic and diluted | $ | (0.22) | | | $ | (0.31) | | | $ | (0.45) | | | $ | (0.68) | |
| Stock-based compensation expense | 0.20 | | | 0.18 | | | 0.37 | | | 0.37 | |
| Employer payroll tax on employee stock transactions | — | | | — | | | 0.01 | | | 0.01 | |
| Amortization of acquired intangible assets | 0.02 | | | 0.03 | | | 0.04 | | | 0.05 | |
| Acquisition-related compensation | — | | | — | | | 0.01 | | | 0.01 | |
| Inventory write-offs due to restructuring | — | | | — | | | — | | | — | |
| Other restructuring charges | — | | | 0.02 | | | — | | | 0.02 | |
| Gain on strategic investments | — | | | (0.01) | | | — | | | (0.01) | |
| | | | | | | |
Adjustment to fully diluted earnings per share (1) | 0.01 | | | — | | | 0.03 | | | — | |
| Non-GAAP net income (loss) per share, diluted | $ | 0.01 | | | $ | (0.08) | | | $ | 0.01 | | | $ | (0.23) | |
| | | | | | | |
| Weighted-average shares used in diluted net income (loss) per share calculation: | | | | | | | |
| GAAP | 312,615,531 | | | 293,170,401 | | | 310,358,089 | | | 290,775,910 | |
| Non-GAAP | 328,123,817 | | | 293,170,401 | | | 329,568,644 | | | 290,775,910 | |
*Certain figures may not sum due to rounding.
(1) For periods in which we had diluted non-GAAP net income per share, the sum of the impact of individual reconciling items may not total to diluted non-GAAP net income per share because the basic share counts used to calculate GAAP net loss per share differ from the diluted share counts used to calculate non-GAAP net income per share, and because of rounding differences. The GAAP net loss per share calculation uses a lower share count as it excludes dilutive shares which are included in calculating the non-GAAP net income per share.
SENTINELONE, INC.
SELECTED CASH FLOW INFORMATION
(in thousands)
(unaudited)
Reconciliation of cash provided by (used in) operating activities to free cash flow
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended July 31, | | Six Months Ended July 31, |
| 2024 | | 2023 | | 2024 | | 2023 |
| GAAP net cash provided by (used in) operating activities | $ | 2,300 | | | $ | (11,903) | | | $ | 44,303 | | | $ | (39,962) | |
| Less: Purchases of property and equipment | (553) | | | (32) | | | (1,439) | | | (494) | |
| Less: Capitalized internal-use software | (7,183) | | | (3,253) | | | (14,544) | | | (6,165) | |
| Free cash flow | $ | (5,436) | | | $ | (15,188) | | | $ | 28,320 | | | $ | (46,621) | |
| | | | | | | |
| Net cash (used in) provided by investing activities | $ | (9,357) | | | $ | (16,402) | | | $ | (115,621) | | | $ | 14,708 | |
| | | | | | | |
| Net cash provided by financing activities | $ | 15,059 | | | $ | 10,499 | | | $ | 21,592 | | | $ | 20,261 | |
| | | | | | | |
Operating cash flow margin | 1 | % | | (8) | % | | 11 | % | | (14) | % |
Free cash flow margin | (3) | % | | (10) | % | | 7 | % | | (16) | % |
August 27, 2024 Q2 FY2025 Letter to Shareholders
Q2 FY2025 Letter to SharehoLderS 2 Table of Contents to our Shareholders 3 technology highlights 6 Go-to-Market highlights 8 Q2 FY2025 Financials 10 Guidance 13 Closing 14
Q2 FY2025 Letter to SharehoLderSSENTINELONE 3 01 To Our Shareholders Our Q2 results once again demonstrate high growth with substantial margin improvement. We exceeded our expectations on all key metrics, including ARR, revenue, gross margin, and operating margin. Our teams executed well, and we maintained our industry leading revenue growth and set new company re- cords for GAAP and non-GAAP gross, operating, and net income margin. Importantly, we achieved a sig- nificant profitability milestone—our first-ever quarter of positive non-GAAP net income and earnings per share, a tremendous achievement. In Q2, revenue grew 33% year-over-year (y/y) to $199 million, and Annualized Recurring Revenue (ARR) grew 32% y/y to $806 million. Our Q2 net new ARR outperformed our expectation by a double-digit percentage. And, we continue to expect new business growth trends to improve in the second half of the year. Based on our business and go-to-market momentum, we’re also raising our revenue guidance for the fiscal year ‘25. Our pace and progress toward profitability remains best-in-class. We delivered a record-high GAAP and non- GAAP gross margin of 75% and 80%, respectively, with our non-GAAP operating margin nearing break-even. In parallel, we achieved our first ever quarter of positive non-GAAP net income and earnings per share. These results show the scalability of our business model and the potential for continued operating leverage. Demand in Q2 was broad based. We continue to lead with best-in-class technology, transparency, and trust. We’re securing an increasing number of businesses of all sizes and geographies, from the largest global enterprises to smaller businesses through our partnerships with MSSPs. Customers with more than $100,000 in ARR grew 24% y/y, and customers with more than $1 million in ARR grew even faster, reaching another company record. Platform expansion rates remain healthy and consistent with recent trends. Our platform adoption and success with larger enterprises continues to drive higher ARR per customer, which increased by a double-digit percentage y/y to a record high in Q2. We’re succeeding with our strategy to drive a higher portion of our business mix through new customer growth. Long term, this will open doors for significant future expansion across our customer base. Among platform solutions, endpoint remains a significant growth driver for our business, and we continue to gain market share. According to the IDC Worldwide Modern Endpoint Security Market Shares 2023 report, SentinelOne grew at the fastest pace among the top 10 vendors in 2023. We expect this momentum to con- tinue, especially as we expand strategic partnerships to bring SentinelOne to more businesses and endpoints than ever before. In addition, our emerging solutions like Data, Purple AI, and Cloud continued to outpace the overall company growth rate in Q2. For instance, Purple AI is proving to be truly transformative and we’re seeing great customer traction. Within months after general availability, Purple AI adoption has surpassed our expectations and contributed to Q2 outperformance. As one of the industry’s most advanced generative AI security solutions, Purple AI unifies, accelerates, and simplifies security operations. Customers are seeing real productivity gains with 80% faster threat hunting and investigations. Overall, our Q2 performance showcases strong execution and significant progress on the go-to-market ini- tiatives outlined last quarter. We've brought in proven leaders, and—we’re optimizing our processes and ex- panding our market presence. Our progress on these initiatives is yielding positive results, which is evidenced by stronger new business generation, competitive win rates, and growth outlook. In Q2, we made significant progress in elevating our market presence and creating new strategic routes to market. We’re expanding the scale and scope of SentinelOne across the cyber ecosystem including incident response providers, cyber insur- ance providers, managed security service providers (MSSPs), and so much more.
Q2 FY2025 Letter to SharehoLderSSENTINELONE 4 Little has changed in recent months from a macro economic perspective, yet a lot has changed in the cyber- security industry. These are unprecedented times—the frequency, complexity, and costs of cyberattacks are reaching new heights. At the same time, the performance shortcomings of other market offerings are becom- ing visible to the public. In just the last few months, we’ve seen high-profile breaches and system failures from the top two endpoint market share vendors. These incidents are extremely disruptive for the millions of people and thousands of businesses who expect reliability from their security providers. Our top priority during this time has been to support our customers and enterprises around the world—providing resources and having objective conversations about technology. The latest global IT outage highlights the significance of platform architectures, process controls, and building resilient security operations. The scale and disruption caused by this incident is a stark reminder of the risks posed by vendor concentration. The cost of protection should never exceed the consequences of a breach. This was an avoidable incident that was born out of risk-prone software deployment practices and a fragile product architecture. In the cybersecurity industry, we share a fundamental goal: to deliver protection and reliability. Partners and customers expect us to deliver on this promise. A key lesson our industry has learned is the importance of product architecture. Understandably, customers and partners are now looking for better platform architectures and building more resilient cyber-defenses. Some of the largest enterprises in the world are now evaluating and appreciating the Singularity platform’s breadth and superiority relative to the competitive offerings – and, they are positively surprised. As always, our goal is to minimize security risk and maximize resilience for enterprises while providing optionality to gain leading security capabilities—security and resilience above all else. As a result, customer interest in our platform and AI-based security has distinctly risen. At SentinelOne, we continue to lead with better technology and customer transparency. Early on, we purpose-built an agent that can simultaneously run dual AI-based detection engines both cloud natively and on-device. We patented behavioral AI for real-time protection on the device, complemented by comprehensive context and triage in the cloud. Redundancy in this context is mission-critical and is not a function of constant software updates. At SentinelOne, we take an open platform ecosystem approach to security to give enterprise flexibility and choice. Most importantly, our platform architecture and behavioral AI-based detection capabilities are pat- ented and unique. When we say autonomous, these are not marketing claims, but a description of how our product works. We’ve entered a New Dawn—a stronger SentinelOne in a more complex cyber landscape. As always, our goal remains delivering the leading security and value to customers and partners. Our teams are executing well and our go-to-market is gaining momentum. We have the winning technology, and our competitive po- sition is stronger than ever. Our financial performance remains industry-leading, and we achieved positive net income for the first time. For years, we’ve led the industry with innovations—and now, we’re seeing an expanding interest in SentinelOne’s AI-powered autonomous security. With $1.1 billion of cash and equiva- lents on the balance sheet, we’re focused on diverse investment opportunities and new growth avenues for the business. We’re optimally positioned to deliver what enterprises need most: leading AI-powered security and resilient cyber-defense.
Q2 FY2025 Letter to SharehoLderSSENTINELONE 5 Q2 FY2025 Highlights (All metrics are compared to the second quarter of fiscal year 2024, unless otherwise noted) • revenue grew 33% to $199 million, compared to $149 million. arr grew 32% to $806 million, compared to $612 million. • Customers with an arr of $100,000 or more grew 24% to 1,233. Customers with an arr of $1 million or more reached a new record. • GaaP gross margin was 75%, compared to 70%. Non-GaaP gross margin was 80%, 3 percentage points higher compared to 77%. • GaaP operating margin was (40)%, compared to (67)%. Non-GaaP operating margin was (3)%, 19 percentage points higher compared to (22)%. • Operating cash flow margin was 1%, compared to (8)%. Free cash flow margin was (3)%, 7 percentage points higher compared to (10)%. • Cash, cash equivalents, and investments were $1.1 billion as of July 31, 2024. SentinelLabs operates as an open venue for threat researchers, committed to sharing the latest threat intelli- gence with a growing community of cyber defenders. By providing novel findings from the world of malware, exploits, advanced persistent threats (APTs), and cybercrime, the SentinelLabs team helps global enterprises and government bodies stay ahead of their adversaries. Research Highlights In 2024, SentinelLabs discovered ‘AcidPour’, a new embedded wiper that expands on the capabilities of AcidRain, being deployed in targeted attacks against Ukrainian critical infrastructure. AcidPour affects a broad range of Linux targets with the added ability to destroy data from RAID arrays and large network stor- age devices. AcidPour's discovery coincides with devastating attacks on Ukraine's telecommunications sector, attributed by Ukrainian SSCIP to UAC-0165, a suspected Russian military intelligence threat actor. AcidPour's deployment underscores the evolution of cyber operations in wartime towards indiscriminate data destruction and long-term disruptive attacks against both military and civilian infrastructure. Our tracking of state-sponsored and financial threat actors alike has unveiled notable shifts in the adver- sary threat landscape. An increasingly disturbing trend of cyberespionage actors using ransomware as a final stage in their operations for the purposes of financial gain, disruption, distraction, misattribution, or removal of evidence, including in attacks against critical infrastructure sectors. At BlackHat 2024, we announced a new community initiative to tackle the evolving problem of reverse engi- neering Rust-based malware. Cybercriminals increasingly favor Rust for its cross-platform capabilities and resistance to traditional analysis tools. In collaboration with researchers from Intezer, SentinelLabs launched Project 0xA11C (‘Oxalic’), focusing on creating accessible tools and fostering community engagement to coun- teract this growing threat.
Q2 FY2025 Letter to SharehoLderSSENTINELONE 6 02 Technology Highlights Unified AI Security Platform Delivers Superior Performance and User Experience Our pace of innovation and autonomous security approach is setting new industry benchmarks. Early on, we took a distinctly novel product architecture approach to deliver unified data-powered security. SentinelOne purpose-built a security agent that simultaneously runs dual AI-based detection engines both cloud natively and on-device. We patented behavioral AI for real-time protection on the device complemented by compre- hensive context and triage in the cloud. This approach has created a new paradigm for automation and pro- tection to combat modern attacks while also enhancing overall enterprise resilience. SentinelOne was once again among the highest-rated vendors in the Gartner Peer Insights™ Voice of the Customer for Endpoint Protection Platforms report. Our fully integrated and unified data platform offers leading AI-powered protection, simplicity, and savings for customers. Enterprises benefit from a single, unified data backend that combines data across all enter- prise critical surfaces—Endpoint, Cloud, Identities, and any third party source. Every customer, regardless of the size of contract, gets leading autonomous protection and visibility. We are transforming the legacy SIEM market with our modern AI-SIEM—scalable, automated, and fully integrated with leading AI capabilities. We’re also seeing tremendous customer interest and adoption of our transformative Purple AI capabilities. Purple’s generative AI capabilities are a major competitive advantage, and we have a clear time-to-market lead. Purple AI is natively integrated across our entire platform. Purple touches every aspect of managing se- curity, and has the ability to see and manage all security events, including those of competing products. Purple alleviates the challenges of machine speed response, talent shortage, alert fatigue, and enhances analyst productivity—all while autonomously securing the enterprise. The difference is vast. Signatures (Antivirus) • People powered • Lacks scale and coverage • Rarely finds advanced attacks AV/Old Legacy Protection Cloud Based Monitoring • People/expert powered; technology assisted • Data intensive “haystack” telemetry • Reactive responses. Complex recovery. Legacy EDR: People Driving Tech AI on Device + Cloud • Data platform to assist people • Machine-built context + response • Automations shrink mean time to respond & recovery. Tech Assisting People Evolution of Security
Q2 FY2025 Letter to SharehoLderSSENTINELONE 7 We’re constantly pushing the envelope with Purple AI. In Q2, we launched Alert Summaries. These provide AI-generated contextual summaries of alerts so analysts can easily view and understand the details and scope of their alerts across their environment. Award-Winning Cloud Security: Industry Leadership and Expansion We continue to expand our Cloud Security product offerings, which now provide extensive and highly perfor- mant runtime protection and posture management solutions. Singularity Cloud Security has been recognized as market leading across CNAPP, CSPM, and CWPP by G2, the world’s largest and most trusted software marketplace. The platform earned more than 240 awards as part of the firm’s recently published 2024 Summer Grid Reports, and was the only CNAPP product to earn a 4.9 out of 5 rating based on opinions from real users. In Q2, we made our Cloud Security Posture Management (CSPM) solution available worldwide. We also launched Cloud Infrastructure Entitlement Management (CIEM) to help organizations manage and control access rights to cloud resources. With this offering, customers can leverage the leading cloud native applica- tion protection platform (CNAPP) to detect risky and over-privileged human and machine identities, pinpoint toxic permission combinations and curtail risk from privilege escalations with greater speed and efficiency. Auto-Generated Alert Summary by Purple AI
Q2 FY2025 Letter to SharehoLderSSENTINELONE 8 03 Go-To-Market Highlights We continued to scale our business through our leading AI-powered Singularity Platform and our partner-sup- ported go-to-market. We maintained strong momentum with large enterprises and strategic partners. Our growth also was balanced across geographies, and our vast channel ecosystem continues to magnify our reach and drive platform adoption. In Q2, we began making significant strides to elevate our market presence and create new strategic routes to market. We’re expanding the scale and scope of SentinelOne across the cyber ecosystem. All of this is just the beginning of a new growth chapter for us. We’re positioning SentinelOne for long-term success in a hundred billion-dollar plus security and data market opportunity. • In the Incident Response segment, we expanded our partnership with Google—becoming a strategic endpoint vendor for Mandiant Consulting. This makes SentinelOne a partner of choice across a majority of the Incident Response ecosystem. • For the cyber insurance industry, we launched the SentinelOne Risk Assurance Initiative. In partnership with an extensive network of leading cyber insurers, we’re helping millions of SMBs seamlessly uplevel security at preferred rates while extending the reach and scale of SentinelOne. • In the federal arena, we recently launched a partnership with CISA to deliver government-wide cyber defense. As part of the CISA’s Persistent Access Capability initiative, the Singularity Platform and Data Lake will provide AI-powered, autonomous threat detection and response across federal IT assets, helping to safeguard our nation’s most critical and sensitive information. • Finally, we continue to strengthen our positioning across the MSSP ecosystem as we help new and existing partners build managed security practices. With multi-tenancy, automation capabilities, and role-based access control, SentinelOne remains a partner of choice for MSSPs.
Q2 FY2025 Letter to SharehoLderSSENTINELONE 9 Customer Growth Our customer growth in Q2 was broad-based across businesses of all sizes and geographies. Our momentum with large enterprises remains strong, as our customers with ARR of $100,000 or more grew 24% y/y to 1,233. Customers with more than $1 million in ARR grew even faster, reaching another company record. Similarly, our ARR per customer continued to grow by a double-digit percentage y/y, reflecting broader platform adoption and success with large enterprises Q2'24 Q2'25 $100K+ ARR Customers at quarter end 994 24% 1,233 Platform Adoption and Expansion New and existing customers are adopting more of the Singularity Platform. Traction with our platform capa- bilities is leading to new growth channels and diversifying our business mix. Our emerging solutions like Data, AI, and Cloud continued to outpace the overall company growth rate in Q2. For instance, Purple AI is proving to be truly transformative and we’re seeing great customer traction. Retention and expansion remained resilient across our customer base, comfortably in expansion territory. Similar to last quarter, a larger portion of our business mix was driven by new customer additions in the quar- ter, which we believe will open doors for significant expansion over time.
Q2 FY2025 Letter to SharehoLderSSENTINELONE 10 04 Q2 FY2025 Financials Our Q2 performance was driven by strong demand from new and existing customers, as well as large and mid-sized enterprises seeking to modernize their cybersecurity. We exceeded our top and bottom line expec- tations, driven by increased scale and operational efficiencies. Revenue & Annualized Recurring Revenue (ARR) Revenue grew 33% y/y to $199 million in Q2. International revenue represented 37% of total revenue, reflecting growth of 36% y/y. ARR grew 32% y/y to $806 million at the end of Q2. Our ARR growth encompassed broad-based contributions from new customer additions, existing customer renewals, and upsells. Q3'24Q2'24 Q4'24 Q1'25 Q2'25Q3'24Q2'24 Q4'24 Q1'25 Q2'25 Annualized Recurring Revenue $ million, year over year growth Revenue $ million, year over year growth $149 33% $164 $174 $186 $199 32% $612 $664 $724 $762 $806
Q2 FY2025 Letter to SharehoLderSSENTINELONE 11 Gross Profit & Margin Gross profit was $148 million, or 75% of revenue, compared to 70% of revenue a year ago. Non-GAAP gross profit was $158 million, or 80% of revenue, compared to 77% of revenue a year ago. This y/y increase was driv- en primarily by increasing scale, data efficiencies, and customers’ growing platform adoption. GAAP Non-GAAP Q2'24 Q3'24 Q4'24 Q1'25 Q2'25 Gross Margin % of revenue, GAAP & Non-GAAP 77% 79% 78% 79% 70% 73% 72% 73% 80% 75% Operating Expenses Total operating expenses were $228 million, including $63 million of stock-based compensation (SBC) ex- pense, employer payroll tax on employee stock transactions, amortization of acquired intangible assets, and acquisition-related compensation costs. Total operating expenses increased 11% y/y, primarily due to an in- crease in headcount and stock-based compensation. Non-GAAP operating expenses were $165 million, rep- resenting 83% of revenue, compared to $148 million, or 99% of revenue, a year ago. Non-GAAP operating expenses grew 11% y/y, driven by an increase in headcount. Research and development expenses were $64 million, up 17% y/y. On a non-GAAP basis, research and devel- opment expenses increased 9% y/y to $42 million and represented 21% of revenue, compared to 26% a year ago. The y/y increase was primarily due to higher headcount. Sales and marketing expenses were $120 million, up 22% y/y. On a non-GAAP basis, sales and marketing expenses increased 19% y/y to $98 million and represented 49% of revenue, compared to 55% a year ago. The y/y increase was primarily due to a higher headcount. General and administrative expenses were $44 million, down 8% y/y. On a non-GAAP basis, general and ad- ministrative expenses went down 11% y/y to $25 million and represented 12% of revenue, compared to 19% a year ago. The y/y decrease was primarily due to lower legal and SBC expenses.
Q2 FY2025 Letter to SharehoLderSSENTINELONE 12 R&D S&M G&A Q2'24 Q2'25Q2'24 Q2'25 Operating Expenses % of revenue, GAAP & Non-GAAP GAAP NON-GAAP 32% 60% 22% 26% 55% 19% 36% 66% 32% 49% 21% 12% Operating & Net Income (Loss) GAAP operating margin was (40)%, compared to (67)% a year ago. Non-GAAP operating margin was (3)%, compared to (22)% a year ago. The improvement in operating margin resulted from revenue growth outpacing expense increases. GAAP net income margin was (35)%, compared to (60)% a year ago. Non-GAAP net income margin was 2%, compared to (16)% a year ago. The increase resulted from revenue growth outpacing expense increases. EBIT EBIT Margin % Q2'24 Q2'25 Q2'24 Q2'25 Operating Income (Loss) & Margin $ million and % of revenue, GAAP & Non-GAAP GAAP NON-GAAP $(79) $(6) (22)% (3)% (40)% (67)% $(100) $(33)
Q2 FY2025 Letter to SharehoLderSSENTINELONE 13 05 Balance Sheet and Cash Flows We ended Q2 with approximately $1.1 billion in cash, cash equivalents, and investments. Our strong balance sheet provides flexibility and support to drive sustainable growth while delivering meaningful margin expansion. Net cash provided by (used) in operating activities for the three months ended July 31, 2024 was $2 million, compared to $(12) million a year ago. Free cash flow was $(5) million in Q2, compared to $(15) million a year ago. Guidance We are providing the following guidance for the third quarter of fiscal year 2025 (ending October 31, 2024) and for fiscal year 2025 (ending January 31, 2025): Q3 FY25 Full-Year FY25 Revenue $209.5 million $815 million Non-GAAP gross margin 79% 79% Non-GAAP operating margin (3)% (5)-(3)% In the third fiscal quarter, we expect revenue of about $209.5 million, reflecting growth of 28% y/y. For the full fiscal year 2025, we expect revenue of about $815 million, reflecting growth of 31% at the midpoint and at the high end of our prior range of $808-815 million. We are seeing increasing enterprise interest for our Singularity Platform and differentiated AI architecture, which can help improve security and operational resilience. The global macroeconomic environment remains dynamic, yet cybersecurity is a top IT priority, driven by an inten- sifying threat landscape. Based on our enterprise-wide security platform, we believe we are well positioned to deliver top-tier growth across multiple large end markets. We expect our third fiscal quarter non-GAAP gross margin to be about 79%. For the full fiscal year 2025, we expect non-GAAP gross margin to be about 79%. Both our quarterly and full-year outlooks reflect continued y/y gross margin expansion. We expect continued benefits from increasing scale, better data processing effi- ciencies, and platform expansion. Finally, we expect a non-GAAP operating margin of (3)% for our third fiscal quarter and (5)-(3)% for the full fiscal year 2025. Our full-year outlook represents about 15 percentage points of y/y operating margin improve- ment, reflecting the increasing scale and efficiency of our business. We are investing in growing our scale and reach as well as key areas of competitive strength, notably data, AI, cloud, and endpoint. The above statements are based on current targets as of the date of this letter, and we undertake no obligation to update them after such date. These statements are forward-looking, and actual results may differ material- ly due to many factors. Refer to the section titled “Forward-Looking Statements” below for information on the factors that could cause our actions and results to differ materially from these forward-looking statements. Guidance for non-GAAP financial measures excludes SBC expense, employer payroll tax on employee stock transactions, amortization expense of acquired intangible assets, and acquisition-related compensation costs. We have not provided the most directly comparable GAAP measures on a forward-looking basis because cer- tain items are out of our control or cannot be reasonably predicted. Accordingly, a reconciliation for non-GAAP gross margin and non-GAAP operating margin is not available without unreasonable effort. However, it is im- portant to note that material changes to reconciling items could have a significant effect on future GAAP re- sults. We have provided a reconciliation of other GAAP to non-GAAP metrics in tables at the end of this letter.
Q2 FY2025 Letter to SharehoLderSSENTINELONE 14 06 Closing We will host a conference call at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time today to discuss details of our fiscal second-quarter results. In addition, SentinelOne will host a technology session for investors on October 16, 2024, at OneCon24, our annual customer conference. SentinelOne management will be joined by customers, partners, and industry experts to discuss SentinelOne’s vision for AI-based autonomous security, new innovations, and evolution of cybersecurity. Please visit our Investor Relations website for more details. The live webcasts and replays of these events can be accessed on SentinelOne’s Investor Relations website at investors.sentinelone.com, along with the related earnings release materials. Thank you for taking the time to read our shareholder letter. We look forward to your questions on our call this afternoon. Sincerely, Tomer Weingarten Dave Bernhardt CEO and Co-founder CFO
Q2 FY2025 Letter to SharehoLderSSENTINELONE 15 Forward-Looking Statements This letter and the live webcast, which will be held at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time on Au- gust 27, 2024, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve risks and uncertainties, including but not limited to statements regarding our future growth, execu- tion, competitive position, and future financial and operating performance, including our financial outlook for the second quarter of fiscal year 2025 and our full fiscal year 2025, including non-GAAP gross margin and non-GAAP operating margin; timing for profitability (on a non-GAAP basis); and general market trends. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “proj- ect,” “target,” “plan,” “expect,” or the negative of these terms and similar expressions are intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. There are a significant number of factors that could cause our actual results to differ materially from state- ments made in this press release, including but not limited to: our limited operating history; our history of loss- es; intense competition in the market we compete in; fluctuations in our operating results; actual or perceived network or security incidents against us; our ability to successfully integrate any acquisitions and strategic investments; actual or perceived defects, errors or vulnerabilities in our platform; risks associated with man- aging our rapid growth; general global market, political, economic, and business conditions, including those related to declining global macroeconomic conditions, the upcoming U.S. election, actual or perceived insta- bility in the banking sector, supply chain disruptions, a potential recession, inflation, interest rate volatility and geopolitical uncertainty, including the effects of the conflicts in the Middle East, Ukraine and tensions between China and Taiwan; our ability to attract new and retain existing customers, or renew and expand our relation- ships with them; the ability of our platform to effectively interoperate within our customers' IT infrastructure; disruptions or other business interruptions that affect the availability of our platform including cybersecurity incidents; the failure to timely develop and achieve market acceptance of new products and subscriptions as well as existing products, subscriptions and support offerings; rapidly evolving technological developments in the market for security products and subscription and support offerings; length of sales cycles; and risks of securities class action litigation. Additional risks and uncertainties that could affect our financial results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our filings and reports with the Securities and Exchange Commission (SEC), including our most recent- ly filed Annual Report on Form 10-K dated March 27, 2024, subsequent Quarterly Reports on Form 10-Q and other filings and reports that we may file from time to time with the SEC, copies of which are available on our website at investors.sentinelone.com and on the SEC’s website at www.sec.gov. You should not rely on these forward-looking statements, as actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of such risks and uncertainties. All forward-looking statements in this press release are based on information and estimates available to us as of the date hereof, and were based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. We do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date of this press release or to reflect new information or the occurrence of unexpected events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non- GAAP financial information, when taken collectively, with the financial information presented in accordance with GAAP, may be helpful to investors because it provides consistency and comparability with past financial
Q2 FY2025 Letter to SharehoLderSSENTINELONE 16 performance. However, non-GAAP financial information is presented for supplemental informational purpos- es only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. In addition, the utility of free cash flow as a measure of our liquidity is limited as it does not represent the total increase or decrease in our cash balance for a given period. Reconciliations between non-GAAP financial measures to the most directly comparable financial measure stated in accordance with GAAP are contained at the end of the earnings press release following the accom- panying financial data. Investors are encouraged to review the related GAAP financial measures and the rec- onciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business. Non-GAAP Gross Profit and Non-GAAP Gross Margin We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross mar- gin, respectively, excluding SBC expense, employer payroll tax on employee stock transactions, amortiza- tion of acquired intangible assets, acquisition-related compensation costs and restructuring charges. We believe non-GAAP gross profit and non-GAAP gross margin provide our management and investors consis- tency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these measures generally eliminate the effects of certain variables unrelated to our overall operating performance. Non-GAAP Income (loss) from Operations and Non-GAAP Operating Margin We define non-GAAP income (loss) from operations and non-GAAP operating margin as GAAP loss from op- erations and GAAP operating margin, respectively, excluding SBC expense, employer payroll tax on employee stock transactions, amortization of acquired intangible assets, acquisition-related compensation costs and restructuring charges. We believe non-GAAP income (loss) from operations and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics generally eliminate the effects of certain variables unrelated to our overall operating performance. Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per Share, Basic and Diluted We define non-GAAP net income (loss) as GAAP net loss excluding SBC expense, employer payroll tax on employee stock transactions, amortization of acquired intangible assets, acquisition-related compensation costs, restructuring charges and gains and losses on strategic investments. We define non-GAAP net income (loss) per share, basic and diluted, as non-GAAP net income (loss) divided by the weighted average common shares outstanding, which includes the dilutive effect of potentially diluted common stock equivalents out- standing during the period. We believe that excluding these items from non-GAAP net income (loss) and non- GAAP net income (loss) per share, diluted, provides management and investors with greater visibility into the underlying performance of our core business operating results. Free Cash Flow Free cash flow is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities less cash used for purchases of property and equipment and capitalized internal-use software. We believe that free cash flow is a useful indicator of liquidity that provides information to management and in- vestors, even if negative, as it provides useful information about the amount of cash generated (or consumed) by our operating activities that is available (or not available) to be used for other strategic initiatives. For
Q2 FY2025 Letter to SharehoLderSSENTINELONE 17 example, if free cash flow is negative, we may need to access cash reserves or other sources of capital to in- vest in strategic initiatives. While we believe that free cash flow is useful in evaluating our business, free cash flow is a non-GAAP financial measure that has limitations as an analytical tool, and free cash flow should not be considered as an alternative to, or substitute for, net cash provided by (used in) operating activities in accordance with GAAP. The utility of free cash flow as a measure of our liquidity is limited as it does not rep- resent the total increase or decrease in our cash balance for any given period and does not reflect our future contractual commitments. In addition, other companies, including companies in our industry, may calculate free cash flow differently or not at all, which reduces the usefulness of free cash flow as a tool for comparison. Expenses Excluded from Non-GAAP Measures Stock-based compensation expense SBC expense is a non-cash expense that varies in amount from period to period and is dependent on market forces that are often beyond our control. As a result, management excludes this item from our internal operat- ing forecasts and models. Management believes that non-GAAP measures adjusted for SBC expense provide investors with a basis to measure our core performance against the performance of other companies without the variability created by stock-based compensation as a result of the variety of equity awards used by other companies and the varying methodologies and assumptions used. Employer payroll tax on employee stock transactions Employer payroll tax expenses related to employee stock transactions are tied to the vesting or exercise of underlying equity awards and the price of our common stock at the time of vesting, which varies in amount from period to period and is dependent on market forces that are often beyond our control. As a result, man- agement excludes this item from our internal operating forecasts and models. Management believes that non- GAAP measures adjusted for employer payroll taxes on employee stock transactions provide investors with a basis to measure our core performance against the performance of other companies without the variability created by employer payroll taxes on employee stock transactions as a result of the stock price at the time of employee exercise. Amortization of acquired intangible assets Amortization of acquired intangible asset expense is tied to the intangible assets that were acquired in con- junction with acquisitions, which results in non-cash expenses that may not otherwise have been incurred. Management believes excluding the expense associated with intangible assets from non-GAAP measures allows for a more accurate assessment of our ongoing operations and provides investors with a better com- parison of period-over-period operating results. Acquisition-related compensation costs Acquisition-related compensation costs include cash-based compensation expenses resulting from the employment retention of certain employees established in accordance with the terms of each acquisition. Acquisition-related cash-based compensation costs have been excluded as they were specifically negotiat- ed as part of the acquisitions in order to retain such employees and relate to cash compensation that was made either in lieu of stock-based compensation or where the grant of stock-based compensation awards was not practicable. In most cases, these acquisition-related compensation costs are not factored into management's evaluation of potential acquisitions or our performance after completion of acquisitions, because they are not related to our core operating performance. In addition, the frequency and amount of such charges can vary significantly based on the size and timing of acquisitions and the maturities of the businesses being acquired. Excluding acquisition-related compensation costs from non-GAAP measures provides investors with a basis to compare our results against those of other companies without the vari- ability caused by purchase accounting.
Q2 FY2025 Letter to SharehoLderSSENTINELONE 18 Restructuring charges Restructuring charges primarily relate to severance payments, employee benefits, stock-based compensa- tion, impairment charges related to excess facilities, and inventory write-offs. These restructuring charges are excluded from non-GAAP financial measures because they are the result of discrete events that are not considered core operating activities. We believe that it is appropriate to exclude restructuring charges from non-GAAP financial measures because it enables the comparison of period-over-period operating results from continuing operations. Gains and losses on strategic investments Gains and losses on strategic investments relate to the subsequent changes in the recorded value of our stra- tegic investments. These gains and losses are excluded from non-GAAP financial measures because they are the result of discrete events that are not considered core operating activities. We believe that it is appropriate to exclude gains and losses from strategic investments from non-GAAP financial measures because it enables the comparison of period-over-period net income (loss). Key Business Metrics We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. Annualized Recurring Revenue (ARR) We believe that ARR is a key operating metric to measure our business because it is driven by our ability to acquire new subscription and, consumption and usage-based customers and to maintain and expand our rela- tionship with existing customers. ARR represents the annualized revenue run rate of our subscription and con- sumption and usage-based agreements at the end of a reporting period, assuming agreements are renewed on their existing terms for customers that are under contracts with us. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates, usage, renewal rates, and other contractual terms. Customers with ARR of $100,000 or More We believe that our ability to increase the number of customers with ARR of $100,000 or more is an indicator of our market penetration and strategic demand for our platform. We define a customer as an entity that has an active subscription for access to our platform. We count Managed Service Providers (MSPs), MSSPs, Man- aged Detection & Response firms (MDRs), and Original Equipment Manufacturers (OEMs), who may purchase our products on behalf of multiple companies, as a single customer. We do not count our reseller or distributor channel partners as customers. Definitions Customers: We define a customer as an entity that has an active subscription for access to our platform. We count MSPs, MSSPs, MDRs, and OEMs, who may purchase our product on behalf of multiple companies, as a single customer. We do not count our reseller or distributor channel partners as customers.
Q2 FY2025 Letter to SharehoLderSSENTINELONE 19 July 31, January 31, 2024 2024 ASSETS Current assets: Cash and cash equivalents $205,898 $256,651 Short-term investments 502,274 669,305 Accounts receivable, net 155,148 214,322 Deferred contract acquisition costs, current 57,355 54,158 Prepaid expenses and other current assets 100,601 102,895 Total current assets 1,021,276 1,297,331 Property and equipment, net 64,257 48,817 Operating lease right-of-use assets 16,535 18,474 Long-term investments 417,161 204,798 Deferred contract acquisition costs, non-current 72,091 71,640 Intangible assets, net 120,307 122,903 Goodwill 629,636 549,411 Other assets 5,856 8,033 Total assets $2,347,119 $2,321,407 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $6,746 $6,759 Accrued liabilities 113,315 104,671 Accrued payroll and benefits 63,681 74,345 Operating lease liabilities, current 4,630 4,689 Deferred revenue, current 399,536 399,603 Total current liabilities 587,908 590,067 Deferred revenue, non-current 103,086 114,930 Operating lease liabilities, non-current 15,497 18,239 Other liabilities 6,941 4,128 Total liabilities 713,432 727,364 STOCKHOLDERS’ EQUITY Class A common stock 29 27 Class B common stock 3 3 Additional paid-in capital 3,110,843 2,934,607 Accumulated other comprehensive income (loss) 1,145 (1,550) Accumulated deficit (1,478,333) (1,339,044) Total stockholders’ equity 1,633,687 1,594,043 Total liabilities and stockholders’ equity $2,347,119 $2,321,407 SENTINELONE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited)
Q2 FY2025 Letter to SharehoLderSSENTINELONE 20 Three Months Ended July 31, Six Months Ended July 31, 2024 2023 2024 2023 Revenue $198,937 $149,421 $385,292 $282,814 Cost of revenue(1) 50,699 44,667 100,836 87,250 Gross profit 148,238 104,754 284,456 195,564 OPERATING EXPENSES Research and development(1) 63,602 54,161 121,923 109,424 Sales and marketing(1) 119,617 98,262 235,447 197,433 General and administrative(1) 44,400 48,433 87,067 100,186 Restructuring(1) — 4,255 — 4,255 Total operating expenses 227,619 205,111 444,437 411,298 Loss from operations (79,381) (100,357) (159,981) (215,734) Interest income 12,853 11,489 24,935 22,024 Interest expense (36) (605) (72) (1,212) Other income (expense), net (421) 1,409 (460) 1,050 Loss before income taxes (66,985) (88,064) (135,578) (193,872) Provision for income taxes 2,199 1,474 3,711 2,535 Net loss $(69,184) $(89,538) $(139,289) $(196,407) Net loss per share attributable to Class A and Class B common stockholders, basic and diluted $(0.22) $(0.31) $(0.45) $(0.68) Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted 312,615,531 293,170,401 310,358,089 290,775,910 (1) INCLUDES STOCK-BASED COMPENSATION EXPENSE AS FOLLOWS Cost of revenue $5,564 $4,068 $10,433 $8,241 Research and development 20,811 15,452 38,276 30,242 Sales and marketing 18,882 13,681 36,956 26,277 General and administrative 19,420 20,705 37,565 44,695 Restructuring — (1,060) — (1,060) Total stock-based compensation expense $64,677 $52,846 $123,230 $108,395 SENTINELONE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (unaudited)
Q2 FY2025 Letter to SharehoLderSSENTINELONE 21 Six Months Ended July 31, 2024 2023 CASH FLOW FROM OPERATING ACTIVITIES Net loss $(139,289) $(196,407) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 21,110 18,623 Amortization of deferred contract acquisition costs 31,252 22,263 Non-cash operating lease costs 1,939 1,973 Stock-based compensation expense 123,230 108,395 Accretion of discounts and amortization of premiums on investments, net (7,420) (11,089) Net gain on strategic investments (345) (2,000) Other 1,887 775 Changes in operating assets and liabilities, net of effects of acquisition Accounts receivable 59,258 27,926 Prepaid expenses and other assets 8,942 6,291 Deferred contract acquisition costs (34,901) (30,272) Accounts payable 10 1,044 Accrued liabilities 5,447 4,386 Accrued payroll and benefits (10,645) (4,393) Operating lease liabilities (2,800) (2,434) Deferred revenue (12,583) 15,101 Other liabilities (789) (144) Net cash provided by (used in) operating activities 44,303 (39,962) CASH FLOW FROM INVESTING ACTIVITIES Purchases of property and equipment (1,439) (494) Purchases of intangible assets (133) (213) Capitalization of internal-use software (14,544) (6,165) Purchases of investments (442,629) (350,416) Sales and maturities of investments 404,677 371,996 Cash paid for acquisitions, net of cash acquired (61,553) — Net cash (used in) provided by investing activities (115,621) 14,708 CASH FLOW FROM FINANCING ACTIVITIES Repurchase of early exercised stock options (21) — Proceeds from exercise of stock options 12,813 13,845 Proceeds from issuance of common stock under the employee stock purchase plan 8,800 6,416 Net cash provided by financing activities 21,592 20,261 NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (49,726) (4,993) CASH, CASH EQUIVALENTS, AND RESTRICTED CASH–BEGINNING OF PERIOD 322,086 202,406 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH–END OF PERIOD $272,360 $197,413 SENTINELONE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Q2 FY2025 Letter to SharehoLderSSENTINELONE 22 Three Months Ended July 31, Six Months Ended July 31, 2024 2023 2024 2023 COST OF REVENUE RECONCILIATION GAAP cost of revenue $50,699 $44,667 $100,836 $87,250 Stock-based compensation expense (5,564) (4,068) (10,433) (8,241) Employer payroll tax on employee stock transactions (132) (76) (339) (126) Amortization of acquired intangible assets (4,195) (5,139) (9,666) (10,111) Acquisition-related compensation (39) (128) (312) (251) Inventory write-offs due to restructuring — (720) — (720) Non-GAAP cost of revenue $40,769 $34,536 $80,086 $67,801 GROSS PROFIT RECONCILIATION GAAP gross profit $148,238 $104,754 $284,456 $195,564 Stock-based compensation expense 5,564 4,068 10,433 8,241 Employer payroll tax on employee stock transactions 132 76 339 126 Amortization of acquired intangible assets 4,195 5,139 9,666 10,111 Acquisition-related compensation 39 128 312 251 Inventory write-offs due to restructuring — 720 — 720 Non-GAAP gross profit $158,168 $114,885 $305,206 $215,013 GROSS MARGIN RECONCILIATION GAAP gross margin 75% 70% 74% 69% Stock-based compensation expense 3% 3% 3% 3% Employer payroll tax on employee stock transactions —% —% —% —% Amortization of acquired intangible assets 2% 4% 3% 4% Acquisition-related compensation —% —% —% —% Inventory write-offs due to restructuring —% —% —% —% Non-GAAP gross margin* 80% 77% 79% 76% RESEARCH AND DEVELOPMENT EXPENSE RECONCILIATION GAAP research and development expense $63,602 $54,161 $121,923 $109,424 Stock-based compensation expense (20,811) (15,452) (38,276) (30,242) Employer payroll tax on employee stock transactions (198) (149) (611) (351) Acquisition-related compensation (789) (298) (1,576) (623) Non-GAAP research and development expense $41,804 $38,262 $81,460 $78,208 SENTINELONE, INC. Reconciliation of GAAP to Non-GAAP Financial Measures (in thousands, except percentages and per share data) (unaudited)
Q2 FY2025 Letter to SharehoLderSSENTINELONE 23 Three Months Ended July 31, Six Months Ended July 31, 2024 2023 2024 2023 SALES AND MARKETING EXPENSE GAAP sales and marketing expense $119,617 $98,262 $235,447 $197,433 Stock-based compensation expense (18,882) (13,681) (36,956) (26,277) Employer payroll tax on employee stock transactions (370) (254) (1,293) (574) Amortization of acquired intangible assets (2,253) (1,954) (4,457) (3,861) Acquisition-related compensation (29) (164) (73) (413) Non-GAAP sales and marketing expense $98,083 $82,209 $192,668 $166,308 GENERAL AND ADMINISTRATIVE EXPENSE RECONCILIATION GAAP general and administrative expense $44,400 $48,433 $87,067 $100,186 Stock-based compensation expense (19,420) (20,705) (37,565) (44,695) Employer payroll tax on employee stock transactions (341) 127 (983) (425) Amortization of acquired intangible assets — (1) — (2) Acquisition-related compensation 1 (14) — (382) Non-GAAP general and administrative expense $24,640 $27,840 $48,519 $54,682 RESTRUCTURING EXPENSE RECONCILIATION GAAP restructuring expense $— $4,255 $— $4,255 Other restructuring charges — (5,315) — (5,315) Stock-based compensation expense — 1,060 — 1,060 Non-GAAP restructuring expense $— $— $— $— OPERATING LOSS RECONCILIATION GAAP operating loss $(79,381) $(100,357) $(159,981) $(215,734) Stock-based compensation expense 64,677 52,846 123,230 108,395 Employer payroll tax on employee stock transactions 1,038 352 3,226 1,476 Amortization of acquired intangible assets 6,448 7,093 14,123 13,973 Acquisition-related compensation 858 604 1,961 1,669 Inventory write-offs due to restructuring — 720 — 720 Other restructuring charges — 5,315 — 5,315 Non-GAAP operating loss* $(6,359) $(33,427) $(17,440) $(84,186) SENTINELONE, INC. Reconciliation of GAAP to Non-GAAP Financial Measures (in thousands, except percentages and per share data) (unaudited)
Q2 FY2025 Letter to SharehoLderSSENTINELONE 24 Three Months Ended July 31, Six Months Ended July 31, 2024 2023 2024 2023 OPERATING MARGIN RECONCILIATION GAAP operating margin (40)% (67)% (42)% (76)% Stock-based compensation expense 33% 36% 32% 38% Employer payroll tax on employee stock transactions 1% —% 1% 1% Amortization of acquired intangible assets 3% 5% 4% 5% Acquisition-related compensation —% —% 1% —% Inventory write-offs due to restructuring —% —% —% —% Other restructuring charges —% 4% —% 2% Non-GAAP operating margin* (3)% (22)% (5)% (30)% NET LOSS RECONCILIATION GAAP net loss $(69,184) $(89,538) $(139,289) $(196,407) Stock-based compensation expense 64,677 52,846 123,230 108,395 Employer payroll tax on employee stock transactions 1,038 352 3,226 1,476 Amortization of acquired intangible assets 6,448 7,093 14,123 13,973 Acquisition-related compensation 858 604 1,961 1,669 Inventory write-offs due to restructuring — 720 — 720 Other restructuring charges — 5,315 — 5,315 Gain on strategic investments (345) (2,000) (345) (2,000) Non-GAAP net income (loss) $3,492 $(24,608) $2,906 $(66,859) BASIC EPS Weighted-average shares used in computing basic net income (loss) per share (GAAP and Non-GAAP) 312,615,531 293,170,401 310,358,089 290,775,910 GAAP basic net loss per share $(0.22) $(0.31) $(0.45) $(0.68) Non-GAAP basic net income (loss) per share $0.01 $(0.08) $0.01 $(0.23) SENTINELONE, INC. Reconciliation of GAAP to Non-GAAP Financial Measures (in thousands, except percentages and per share data) (unaudited)
Q2 FY2025 Letter to SharehoLderSSENTINELONE 25 Three Months Ended July 31, Six Months Ended July 31, 2024 2023 2024 2023 DILUTED EPS RECONCILIATION GAAP net loss per share, basic and diluted $(0.22) $(0.31) $(0.45) $(0.68) Stock-based compensation expense 0.20 0.18 0.37 0.37 Employer payroll tax on employee stock transactions — — 0.01 0.01 Amortization of acquired intangible assets 0.02 0.03 0.04 0.05 Acquisition-related compensation — — 0.01 0.01 Inventory write-offs due to restructuring — — — — Other restructuring charges — 0.02 — 0.02 Gain on strategic investments — (0.01) — (0.01) Adjustment to fully diluted earnings per share (1) 0.01 — 0.03 — Non-GAAP net income (loss) per share, diluted $0.01 $(0.08) $0.01 $(0.23) WEIGHTED-AVERAGE SHARES USED IN DILUTED NET INCOME (LOSS) PER SHARE CALCULATION GAAP 312,615,531 293,170,401 310,358,089 290,775,910 Non-GAAP 328,123,817 293,170,401 329,568,644 290,775,910 Three Months Ended July 31, Six Months Ended July 31, 2024 2023 2024 2023 GAAP net cash provided by (used in) operating activities $2,300 $(11,903) $44,303 $(39,962) Less: Purchases of property and equipment (553) (32) (1,439) (494) Less: Capitalized internal-use software (7,183) (3,253) (14,544) (6,165) Free cash flow $(5,436) $(15,188) $28,320 $(46,621) Net cash (used in) provided by investing activities $(9,357) $(16,402) $(115,621) $14,708 Net cash provided by financing activities $15,059 $10,499 $21,592 $20,261 Operating cash flow margin 1% (8)% 11% (14)% Free cash flow margin (3)% (10)% 7% (16)% SENTINELONE, INC. Reconciliation of Cash Provided by (Used in) Operating Activities to Free Cash Flow (in thousands) (unaudited) SENTINELONE, INC. Reconciliation of GAAP to Non-GAAP Financial Measures (in thousands, except percentages and per share data) (unaudited) *Certain figures may not sum due to rounding. (1) For periods in which we had diluted non-GAAP net income per share, the sum of the impact of individual reconciling items may not total to diluted non-GAAP net income per share because the basic share counts used to calculate GAAP net loss per share differ from the diluted share counts used to calculate non-GAAP net income per share, and because of rounding differences. The GAAP net loss per share calculation uses a lower share count as it excludes dilutive shares which are included in calculating the non-GAAP net income per share.
Contact Us investors@sentinelone.com sentinelone.com © Sentinelone 2024 About SentinelOne Sentinelone (NYSe:S) is pioneering autonomous cybersecurity to prevent, detect, and respond to cyber attacks faster and with higher accuracy than ever before. our Singularity Xdr platform protects and empowers leading global enterprises with real-time visibility into attack surfaces, cross-platform correlation, and aI-powered response. achieve more capability with less complexity.
v3.24.2.u1
Cover
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Aug. 27, 2024 |
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Aug. 27, 2024
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SENTINELONE, INC.
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DE
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001-40531
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99-0385461
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444 Castro Street
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Suite 400
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Mountain View
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CA
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SentinelOne (NYSE:S)
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부터 8월(8) 2024 으로 9월(9) 2024
SentinelOne (NYSE:S)
과거 데이터 주식 차트
부터 9월(9) 2023 으로 9월(9) 2024
